After you've generated tenant interest with your great rental listing and fair rent price, you need to decide if a prospective tenant is a good fit for your property. It's common for landlords to make this huge mistake: only requiring a rental application and meeting their tenant at a showing. This method leaves room for error when deciding if a prospective tenant is qualified.
Screening tenants is your key to success. A solid tenant screening process tells you if your tenant will likely pay rent (based on affordability and their financial history) and if your tenant will be responsible (based on employment stability, eviction history and criminal history).
Your tenant screening process should:
- Include a rental application that asks the right questions.
- Require a tenant background and credit check.
- Include a showing where you ask questions and look out for these red flags:
- Inconsistent answers to questions;
- Reluctance to complete a credit and background check;
- Delayed communication, expressing disinterest; or
- Disrespectful behavior at your property showing.
Your tenant screening process should be consistent. To make sure you're complying with fair housing laws, you should follow the same process for everyone and talk to a lawyer if you have any questions.
The easiest way to complete tenant screening is online. Using an online application and a credit and criminal background check is faster and provides enhanced security for your tenants. They can be assured that their personal information will not be lost or misused.
How can I check a tenant's credit?
There are several ways to get a tenant credit report, but the easiest solution is using an online service. As soon you enter their email, they'll receive an invite asking them to authorize the reports by entering their Social Security Number. Shortly after, you'll get an email stating that the report is ready to be viewed.
Is the tenant financially responsible?
Credit scores range from 350 to 800. Typically, the higher someone's score is, the more financially responsible they are. Beyond the credit score, credit reports reveal even more information: red flags, account summaries and tradelines.
- Red flags are typically indications of potential fraud, and this information is gathered based on a tenant's residence history and employer info.
- You'll be able to view a tenant's current monthly balances organized by account type and their current debt load.
- And last, you'll view a tradeline of each open account complete with payment status, so you know whether they have a history of making payments on time.
What can be considered in a decision?
As a landlord, you're allowed to decline a tenant for not having enough income, not being financially responsible, or having too many financial obligations to afford your rent price.
However, you're required to tell a tenant if you're rejecting them due to information on their credit report, according to the Fair Credit Reporting Act. This gives tenants the opportunity to dispute any information on the credit report with the credit bureau.
Before making your final decision, we also recommend requesting two more important reports: background and eviction reports. With all three reports, you'll get a complete view of who your applicant is.
- Credit reports tell you how your applicant treats creditors and their finances,
- Tenant background checks tell you how they treat society and neighbors, and
- Eviction reports tells you how they've treated prior landlords.
