Tenant Credit Checks
Rental Application Checks
Tenant credit checks are an important part of being a landlord or property manager. If you don’t know how to run credit checks on prospective tenants, you’re constantly going to have credit risks leasing apartments and rental houses from you. You can check an applicant’s credit history without investing too much time or expense.
Required Information on Applications
You can get your applicants to help you with part of the tenant credit check process, by simply requiring all applications to include information that lets you decide whether they are credit risks or not. Besides employment status, also ask for employment history in the past 5-10 years, the names of their former landlords and/or places they rented, and a detailed credit history.
Many of those with a bad credit history won’t even apply. Those applications you get should be higher quality, and even those who have a bad credit rating either feel they’ve turned their debt situation around and can explain the process to you when you speak, or else they have unmitigated gall. In either case, ask about their current credit sitution and their credit record, to gauge whether they are conning you or not.
Reducing Your Detective Work
By insisting on a credit history, you eliminate a lot of the legwork you normally would have to do. Keep in mind that major credit reporting companies are likely to have not only a credit history, but they’re likely to list past evictions and convictions on their reports. Take a look at these before you sign the lease.
One reason not to go this route, though, is because people might provide false reports or out-of-date credit reports. The next option is for landlords who don’t want that hassle, and is probably the recommended option by this site.
Rental Application Fees
If you don’t want to limit the number of applications you receive, and therefore the number of potential renters, another option is to assess a “rental application fee”. This is a fee someone must pay to apply for a lease. This fee goes to pay for you to conduct credit checks on the application.
Once again, this might drive away certain costumers, but it’s likely the people being driven away are going to be the ones short on rent, so I wouldn’t worry too much about that. A reasonable fee drives away the unwanted, because they know their credit history is going to disqualify them from renting.
Remember, when you charge application fees, be sure to run a credit check on the applicant, so you know if they are trustworthy. Also, when you run a credit background check, you should pass this along to the applicant, or at least a copy, after you’re through with it.
Verify Employment Status
Do you “due diligence” on the applications you receive. Call the bank and the employer listed on each application, to make sure the banking and work status match what is being claimed on the application. Many people lie on applications, hoping you aren’t diligent. Don’t be duped by being lazy.
Network with Other Landlords
Call these prospective tenant’s former landlords, to know what kind of a renter they were before. Past conduct is a good sign of future conduct, when it comes to rental properties. Get to know as many landlords in the area as possible, so you know the value of the information they’re giving you.
Consider the National Tenant Network
There are actually agencies which screen tenants, if you’re willing to pay money to get reports on potential tenants. These are good, but each report is likely to cost money.
Don’t Discriminate
Look at the numbers and decide. Don’t look at race, religion or gender, when deciding whether to rent or lease a property to a particular tenant. Have one standard by which you select tenants, complete with a particular credit score or dis-qualifiers in the case of past rental conduct. This way, you avoid complaints of discrimination filed against you.
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This entry was posted on Monday, April 5th, 2010 at 3:28 pm and is filed under Background Checks, Housing records, Private Investigation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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