Screening Tenants and Credit Scores

Screening Tenants and Credit Scores

Pre-screening and screening potential tenants is one of the most important elements of property management. Tenant screening allows for further research on financial habits and law-abiding behavior to ensure the protection of a rental property. All property managers enjoy having perfect tenants that can show verifiable income, no past evictions, a clean criminal background check, good credit, and positive references. Evictions, late (or non-payment) rent, and damage to property are all items that the property owner doesn’t want to hear about, nor does a property manager want to deal with. There is a variety of different tenant screening services available today that offer access to criminal background checks, social security number verification, credit reports, and eviction information.

Problem and unqualified tenants are never easy to deal with and while a property may sit vacant awaiting a renter it’s best to have a qualified tenant even if it means taking more time to find one. When an inquiry for a property comes in begin the tenant screening process, as more time is wasted with unqualified or not-serious tenants. Many property managers take the serious prospects who have shown interest in the property and invite those people to a showing. By meeting a prospective renter face to face, it allows you to put a face to the name and get to know the person better. When a tenant signs a lease, then it’s up to the property manager to work with them over the term of the lease. Thus it is important to get to know the person and develop a working rapport.

Discrimination accusations are best avoided when a paper trail is put into place and kept for two years. Tenant selection must abide by the Federal Fair Housing Amendment Act as well as any state or local anti-discrimination laws that may also apply. Treat each potential renter fairly and unbiased to avoid any further accusations.

Not all applicants are honest and supplying false information on a rental application is not a criminal offense. Therefore, every piece of information must be thoroughly verified for accuracy. Through reference and credit checks, most information can be uncovered. Don’t assume that someone is nice enough and then forego the screening process. Dishonest people can make a business of fooling people, and you don’t want to be taken advantage of.

A credit report can tell you a lot about a person. Everything from payment history to bankruptcies, as well as other items, may show up on a credit check. While all three major credit rating agencies (Equifax, Experian, and TransUnion) allow for a person to initiate a credit report on themselves and share it with a landlord securely, paperwork can be altered. That is why many property management professionals insist on sourcing their own credit report on potential tenants. Low credit scores or a poor payment history may both be red flags as a person that doesn’t pay bills on time may not pay rent on time either. By checking a prospects rental and financial history a property manager can ensure that an applicant is qualified and the right fit for the property.