BY: HOUSERIE 08/16/2017
Property owners looking to rent out their places have a lot of work to do before their property can be listed. There are logistics and administrative matters to handle, as well as making sure that the property itself is up to par with standard building codes. In addition, the property should be marketed and advertised at the right places so people looking for a rental property can apply as prospective tenants.
Speaking of tenants, this is another factor that must be carefully considered by the property owner. Ideally, there should be a tenant background check system in place to ensure that they are only renting their property to trustworthy tenants.
There are many benefits to doing a comprehensive tenant check foremost of which is ensuring the quality of tenants in the property. Ideally, property owners want to get tenants that have a clean criminal and eviction history, have a good credit rating and history, and can be trusted enough to respect the rules of the property as well as the rights of the other tenants.
A tenant background check can help you determine whether an applicant is a viable candidate for your property. By providing you with actual relevant information about prospective tenants, you can make better judgment and discernment as to whether or not you should accept their application.
Apart from that, having this factual information serves as a good basis for the property owner to reject an applicant without fear of reprisal or accusation of discriminating against the applicant.
The first thing to do with a tenant background check is to have the prospective tenant file an application form indicating their interest to rent your place. This tenant application should include the tenant’s basic profile details such as current address, employment, income, and how many people are expected to live in the property.
Employment details, social security number, contact information for previous landlords, copy of driver’s license, and credit report ratings may also be required for disclosure. With all this information you can then make an informed decision as to whether this tenant meets your screening criteria for your property.
When it comes to getting the credit report, know that there should be proper authorization first before you can go snooping into the applicant tenant’s records. No less than the Fair Credit Reporting Act requires property owners and managers to first seek the explicit consent of the tenant to check up on their credit rating and history as this is something that is well within their rights to privacy. An authorization form can be attached to the tenant application so the tenant can give consent to the landlord to request access to their credit report.
There are three primary bureaus responsible for handling people’s credit reports: TransUnion, Experian, and Equifax. Once the authorization to access the applicant’s credit report is recognized, the investigation into their credit can begin.
Credit reports are basically a thorough documentation of the prospective tenant’s financial history. It will show if they have any outstanding loans with their banks or any other lending institutions, what their minimum monthly payment on those loans will be and how many late payments they have had.
Foreclosures, bankruptcies, previous instances of evictions, and any and all other public record events that pertain to their credit will all be uncovered in the credit report. Last but not least, it will also reflect a credit score, which essentially rates how financially reliable a person is. A passing score means that they should prove to be outstanding tenants if based only on their credit report. A failing score could be taken as a warning that there could be some risk to you as a property owner if you accept their application despite their proven history of being less than ideal tenants or payers.
In a nutshell, running a tenant background check should be standard procedure when running a property rental business. If you want to have a profitable rental business that runs efficiently, do pay attention to the kinds of tenants that you bring in. A company like Houserie.com can help you with this.
How to Conduct a Tenant Background & Credit Check. SFGate.com.
Background Check for Tenants. Experian.com.