How to do credit checks on renters
WHY SCREEN POTENTIAL RENTERS?
The implementation of a tenant screening process will minimize future tenant problems. By checking on the background of a potential renter and thereby establishing their qualification as a tenant, the risk of experiencing the scenarios noted above becomes far lower. Not only do bad tenants cost owners and managers money, their actions can also bring unforeseen liabilities for a tenant's actions.The Telephone Interview: Often the first contact with a prospective tenant is by telephone, especially if the rental has been advertised in a local newspaper. This is the time for the landlord or a representative to ask the right questions that initiate the qualification process. Questions to be asked to residential as well as commercial renters should include:
- Name of prospective tenant
- Telephone contact number
- Date prospective tenant wishes to occupy premises
- Does the prospective tenant have landlord references?
- Reason for choosing to move
- Number of people in family
- Number of children, if any, and their ages
- Type and number of pets, if any
- Is anyone in the family a smoker?
Personal Interview: If both parties are satisfied following the telephone interview, it is normal for a prospective tenant to wish to see the property. This also affords the owner or representative an opportunity to meet the party in question. Much can be gleaned from this interview.
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The following are important items to note when meeting a prospective tenant: Appearance - Is the person neatly groomed? Does the person make a good first impression? A person that is unkempt is often one whose personal living space will be similarly in disarray.
Vehicle - What type of conveyance does the person drive? It is neat and clean? Also make note of the age and make of the vehicle, for this can give some indication of either income level or a person's expense habits.Personal Demeanor - It is important to appraise the person's overall attitude and manners. Is the individual respectful, or is this the type of person that will be difficult to deal with if any criticism or complaints should arise? If any family members or business associates accompany the prospective renter, also observe their demeanor. Depending upon conditions, did the renter, family members or business associates wipe their feet when entering the premises? Were any parties smoking without first asking permission? These mannerisms can tell a lot about people. The Rental Application Form: A rental application form should require the following information:
- Full name of applicant, social security number, date of birth and current address ApplicantГўв‚¬в„ўs addresses for the past ten years
- Landlord's names for past ten years (if rented during this time)
- Applicant's professional/trade licenses or certifications (for commercial space rentals)
- Applicant's current employment and current salary
- Applicant's job description or occupation
- Applicant's past employment for a minimum of three years
- Applicant's highest level of education
- Credit references and a question regarding bankruptcy
- Questions regarding misdemeanor or felony record for applicant
- Names of all co-renters and occupants
- For co-renters who are not family members, a separate application should be completed by each person.
- Three personal references, including addresses and telephone numbers
- Name of a relative not living with applicant, including relationship, address and telephone number
- Driver's license number and state of issue (also make a copy of licnse)
- List of vehicles and license plate numbers
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Remember that this information should be confirmed by use of a database search. If, during the search, names of friends or relatives not listed on the application should appear, it is a good idea to follow through and check with these individuals, as it may reveal hidden negative information the application was attempting to hide.
Personal references and past landlords are very major sources of the type of information regarding character, demeanor and manner in which the applicant maintains their personal property. Always ask a referee how long they have known the applicant and if they deem the person to be reliable. Inquire about such matters as their relationships with neighbors; any noise they or their pets may have made that disturbed others and whether they left the property in good condition. If it is possible to find other residents still living in a complex where the applicant resided, further validate the person's character by talking to them.
Employers are a valuable source of information regarding an applicant's integrity, interpersonal work skills and demeanor. Contact human resources or supervisory personnel to inquire about the person's work record for the dates they have indicated. Also ask if the person was terminated or left of their own accord.
If an applicant is self-employed or a business owner, ask for copies of business banking statements for the past few months or for tax filings for the past year. Also, the Secretary of State's corporation division will have information on businesses that are incorporated. Business background checks can also be run to verify the applicant's credit-worthiness and public relationships.
The signed application should include a "Release of Information Statement, which enables the landlord to then check the person's background to determine if they have been truthful in answering all questions. This check is vital to determining the character of a potential renter. In addition, a complete background check will also determine financial responsibility and stability.
Signed applications with a "Release of Information Statement" should be obtained from all adult parties who will occupy the premises. And each application should be properly screened to eliminate later problems regarding financial stability and personal behavior.
Essentially the background check validates the honesty of the prospective tenant. Thus
it is important to follow through with an actual screening check to verify the information. Otherwise the application form serves no real purpose. Also look for inconsistencies between parties when applications are cross-checked. Background information may be confirmed by contacting references or through records searches.
If a decision is made to deny rental, the application along with information learned through the screening must be disclosed to the applicant as a reason for denial.
Tenant Screening - Sample Release of Information Forms PDF File: Application for Release of Information
The following information is intended to provide landlords with information regarding where to search for particular types of background information beyond the obvious, such as the employers, other landlords and personal references.
Credit Information: Obtain a credit report on a prospective tenant from one of the major credit reporting bureaus. The credit report is especially important because it will indicate whether a particular person has a history of paying bills such as rent on time.
Contact one of the credit bureaus or an information provider who is cleared to access credit reports and who has agreed to comply with the Fair Credit Reporting Act (FCRA), to obtain credit reports. This record is private and may be released only with the consent of the individual in question. If in possession of a signed release from the applicant, it is possible to receive this information. Alternately, the prospective applicant can be asked to request their credit report, which is free for the asking from any of the three consumer bureaus. The credit report shows account and payment history, debt load, total liabilities, collections, judgments, evictions, and bankruptcies.
If denying an applicant because of negative information on a credit report, the applicant must be sent an "adverse action" letter, which informs the applicant of three things: the reason for rejection, the name and address of the agency that reported the negative information and, the applicant's right to obtain a free copy of the report by requesting it from that agency within 60 days.
Criminal History Data: If there is any doubt as to the applicant's personal or moral character, it is important to check for criminal history background. Criminal information is public record held by the various courts. Federal records are maintained at Federal District Courts. The State Department of Justice keeps state records. State records are stored in Criminal Records Repositories. The most comprehensive block of criminal files will be found at any county courthouse. See, How to Search Criminal Records or Conduct a Criminal Records Court Search
Criminal history searches should include a county criminal court search, a statewide criminal courts search, a National Department of Corrections felon search, and a search of offender databases. The OFAC's Patriot Act Search Database is a watch list, essentially a compilation database of national and international databases.
It is important to know that criminal records are indexed by name and date of birth. This information is often misrepresented by people who are attempting to make it difficult to connect them to a record. Search databases inputting all known and discovered name variations and aliases.
Criminal history records may reveal charges, adjudications and outcomes. In addition, they can verify a person's true identity by revealing aliases along with other vital statistics.
Business and Professional Licensing: When checking on self-employed or corporate levels for an applicant who has listed their own business rather than an employer, there are specific details one wishes to know. Is the business or professional entity licensed? Most every company and individual doing business is required to be licensed to do business in most communities. Verify any required state license with the appropriate licensing entity. Usually the Secretary of State's Department of Professional Regulation keeps records about licensed professionals and the Accountancy Board reports on those licenses.
It is also important to have the names of owners and principals, plus contact information if the applicant is not the sole proprietor. The county courthouse has "Doing Business As" (DBA) applications on file that contain information about the people who filed the application. Corporations, partnerships, and sole proprietorships are all registered. Their filings are public record. Much information about business enterprises, corporations, and the people involved in these various entities is available from state repositories generally located in or near each state's capital.
Law Suits, liens, Judgments, Bankruptcy Filings, and Tax liens: These records contain information pertaining to adjudication, assets, tax liens and mechanic's liens against individuals, business owners and principals. These records are mostly stored at the county courthouse where the individual or business is located. State Records contain UCC filings, information about liens, collateral, litigation, and judgments. Litigation initiated by the government, such as bankruptcy filings and tax liens, are within the Federal Court System.
Notice to Users of Consumer Reports: Obligations of Users Under the FCRA:
IMPORTANT DATABASE SEARCH REMINDERS
When searching the various databases, keep in mind that previous addresses, landowners, and roommates are often revealed in these database searches.
Eviction database searches confirm application input information.
Sex Offender databases can be scrutinized.
National Trace Detail searches confirm identity, past addresses, and identify neighbors.
Credit Header searches confirm social security numbers provided by applicant.
If selecting an information provider or tenant screening company, look for one with connections to a network of nationwide eviction databases and with direct access and fast turnaround time. A local eviction or skip tracer database source may not provide sufficient background information on a tenant moving in from another state. A Tenant Background Check can be run immediately using our connections to a large network of databases.
ADDITIONAL TENANT SCREENING ITEMS IF NEEDED
- Also Know As (AKA's); it is important to discover other names associated with an applicant
- Has applicant used other Social Security Numbers in the past?
- Date and place Social Security Number issued
- Others associated with applicant's SSN
- Bankruptcies, Tax liens, Civil Judgments
- Civil litigation search
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Article provided by: Investigative Professionals LLC, В©2012 Information Providers.
Investigative Professionals' Complete Background Check Reports confirms a person's identity and provides the essential facts you most need to know. Background investigations are performed for business or personal reasons. The depth and breadth of information returned will often make the difference between success and failure in a variety of relationships. Investigative Professionals offers free consultation by phone and by email. All Reports are 100% guaranteed & confidential. Compiled Reports are often returned within hours.Source: www.howtoinvestigate.com