When it becomes necessary to perform a tenant credit check, using a professional service is the best route to take. Having someone who is a professional in this area can find the overall dependability of a prospective tenant, which can save you time and future headaches. By checking an applicant’s background, which includes his credit report, previous employment, and prior rental history, a landlord or property manager can find the best candidate, which can save time and cost of evictions and property repairs.
When an applicant first applies for a rental agreement, the one who takes the information needs to be very careful about obtaining the facts that validate who the applicant really is. He should ask to see identification and write down all pertinent information carefully. A phone call to a prior landlord can often quickly indicate whether the applicant is a good risk or not. This can aid in making a timely determination regarding the applicant.
Following Procedures
In the case of rental housing, whether the landlord credit check is conducted by the property owner, property manager or an outside source, all parties must be aware that they are subject to the Fair Credit Reporting Act (FCRA) requirements for property owners and property managers, which is designed to protect the privacy by Consumer Credit Agencies (CRA).
This means that a property owner or property manager must provide the applicant with an “adverse action notice” if they are denied a rental or lease based on the information found through a credit report. Written permission should be given for any background check that is conducted, to be on the safe side of the law.
Credit Report
Several sources for consumer credit reports on individuals can be conducted by using credit bureau sources, such as Experian, Trans Union and/or Equifax or an affiliate company. These reports will indicate the financial viability of the applicant and will let the property owner or property manager know if he is diligent in paying his bills in a timely manner.
Adverse Action
Tenant background checks can be used to indicate whether an individual has had an adverse action taken toward him regarding the rental or lease of property. Adverse action will indicate to a property owner whether an applicant has had prior evictions, or whether he has been required to use a co-signer for previous rentals or leases.
The notice must provide the name, address and telephone number of the Credit Reporting Agency from which the report was received. Applicants do have the right to dispute the accuracy of these reports.
Criminal Record
Tenant applicant validation can also include the use of a criminal background check in order to vet an applicant. Criminal background checks can be conducted online by the property owner or property manager or through an outside source. A property owner or property manager may not want an individual with a felonious background or a child molestation charge living on his property. A criminal background check will indicate whether a problem is already there.
Again, it is best to gain written permission of the applicant before conducting any type of background check.
The Bottom Line
When screening applicants, careful vetting of new applicants is the most important piece of the rental process. Whether you use online resources or a vendor whose focus is background checks and applicant screening, diligence will pay off. By finding out the viability of a candidate upfront, a property owner or property manager can save himself a lot of time, money and anguish.
Yes, it can be time consuming, but it is going to be time well spent.