Minimize Risk
Tenant Background Checks minimize risk!
1. Credit Reports - Fraud Prevention Tool
A tenant credit check on a Prospective Tenant is likely the most valuable piece of information that you can obtain. Here is why:
- By comparing the personal information on the rental application to the personal information on the tenant credit report, you can determine if the Prospective Tenant has been truthful with you or not. Does the name, date of birth, SSN match? This identifies your Prospective Tenant so that you will know who you are dealing with.
- Delinquent or bad tenants generally leave out the most current address where they have not paid rent or had difficulties with the previous landlord. Compare the address on the rental application to the address on the tenant credit report. Does it match? A tenant credit check will list current and previous addresses in most instances, if the address is not current, neither is the credit history, that is a red flag and the tenant credit report in all likely hood will not have a good rating.
- A credit report will most often list current and previous employers where the credit history is recent, again if credit history is not recent or current that is a red flag and the credit report will not have a good rating.
- A tenant credit report lists liens, bankruptcies, collections and legal items. Generally if the credit history has problems there will also be a list of collections and/or legal items reported.
- A tenant credit report lists all of the accounts related to Credit Grantors and it rates each account. 1 thru 9, 1 being the best rating, 9 being the worst, it tells you the balance on each of those accounts and any past due amounts. If the rating is a 9 it will likely tell you that the account is out for collection and that the Credit Grantor has closed the account.
- A tenant credit report will tell you who has been making enquiries on the Prospective Tenant, has he/she been applying for credit anywhere else recently? Is a Collection Agency making inquiries? Has any other landlord/Property Manager been making inquiries?
- ATS obtains a risk predictor (FICO) score for you from the Credit Bureau; this is a guide that predicts future risk based on the past and current credit history.
- ATS provides a credit decision report for a non-site inspected member which includes applicant identification information from Lexis Nexis. The Tenant credit history is rated in this instance and makes it very easy to understand.
2. Criminal Record Check - Fraud Prevention Tool
The National Criminal Report that ATS obtains for you, searches criminal conviction, sexual offender registry and Department of Corrections records from across the United States and provides information on any found matches to your applicant. Choose from the Please select one menu to determine if we can obtain criminal record information and sexual offender information from your State:
Important to note: While this National Criminal Record Search covers a broad spectrum of databases, it does not cover all of them, there are many databases that hold criminal record information, they are not networked and access too many of them is not available. You may want to determine if you can access Criminal Records at your local Count Court Registry. A phone call to the Information Desk is probably the quickest way to find out.
As a Landlord you want to minimize your risk, ATS Tenant Screen helps you do that, however there is more due diligence that you can conduct i.e. contact the employer, the previous landlord and conduct a criminal record search with your local County Court Registry. You want to take the Risk out of Renting, the more due diligence the less risk.
Go here for further Tips & Advice on tenant screening
The National Criminal Report contains:
- Source/type of record (State Court/Department of Corrections, County Court, etc.)
- Offence description
- Various dates (offence, conviction, prison admission and release)
- Additional identifying information (height, weight, race, hair color and eye color)
- Case reference codes for further research
- Over 700,000 photos from Department of Corrections records and Sexual Offender Registries
The fee is $16.95 USD for a National Criminal Record Search, so it doesn't matter what State your Prospective Tenant was convicted in, if he/she has a criminal record it is likely to be found. Please note that the fee applies whether there is a record or not. ATS pays a fee each time the database is accessed.
This fee is discounted for Associations, Property Managers, Apartment Owners and other Organizations that request numerous Tenant Credit Checks on a monthly basis. There is no other fee for the ATS service.
3. Eviction Search
The Eviction Search is from one of the largest Eviction databases in the country. The combined database displays money judgments, possession only judgments, skips and property damage claims. Please see the example of the information provided by Eviction Search.
Note: In the event there is a name match but the address does not match what you have on the rental application, ATS can obtain previous address(s). You can then compare the address(s) on the Eviction Search to the previous address(s) that ATS obtained for you to help determine if it is your Prospective Tenant. You might just want to go ahead and speak with the Individual to determine whether the record belongs to them or not. Be straight up..."so Mr./Ms. Prospective Tenant: tell me about the eviction with name on eviction report".
4. Contact Previous Landlord
Part of your tenant screening process should include contacting the previous landlord, you want to know if the Prospective Tenant paid the rent on time, was there any damage upon departure and was he/she noisy and/or disturb other tenants. Did he/she meet all the obligations on your lease agreement?
TIP: When you call the previous landlord, the first question should be: Can you tell me what you have available for rent? Sometimes Prospective Tenants use friends as references, you have to be deceptive and determine whether you are speaking with another landlord or a friend, when you ask the above question and a friend is answering the telephone, their first response will be, "you have the wrong number".
5. Contact Employer and/or ask for pay stub
As a landlord you want to know if your Prospective Tenant is stably employed, is his/her income enough to pay living expenses and your rental fees? How long has the Prospective Tenant been stably employed
The Human Resources or Accounting Department should be able to advise you what you want to know. They may want you to fax them a copy of the rental application that has the consent/release clause prior to giving you any information.
You can request to see a pay stub from the Prospective Tenant, this serves several purposes, aside from telling you what the bi/weekly or monthly income is, the pay stub will have the Prospective Tenant's name on it, and it should have his /her current address and possibly the SSN. Make sure that you make note of everything useful that is on the pay stub. This kind of tenant screening will save you time & money.
6. Utility, Telephone, Cell Bill
If a Prospective Tenant claims to have previously rented, then he/she should have a fairly current utility or telephone bill. Ask to see it, it will have a name and an address on it, this is good information that you can use to compare to the information on the rental application. Does it match? If there is no utility or telephone/cell bill available, why not? Refer to the landlord checklist in the forms section which will assist in conducting your tenant checks. A good tenant screening process will incorporate this kind of scrutiny.
7. Self Employed
Many Individuals are successfully self employed; many however are not. As a landlord you want to ensure that your self employed Prospective Tenant, will be able to meet your rental fee obligations. Tenant screening for this type of scenario will ensure that your landlord criteria is met and that you minimize your risk of income loss.
Ask to see a W2 (USA) T4 (CDN) from last year; it is usually a good barometer as to whether or not the Prospective Tenant will be able to meet his/her monthly rental fee obligation, as well as living expenses and other debt requirements. Quite often tenant credit reports will not meet your criteria of credit worthiness, you must then establish tenant worthiness. i.e. does prospective tenant pay rent on time. Contact current and previous landlord for information. Refer to criminalfraud.com link as noted above under #2.
8. Interview
Get to know your Prospective Tenant, ask these pertinent tenant screening questions:
- How long have you been in this area?
- Do you have any family living close by?
- How many times have you moved in the last three years?
- How long have you been employed with your current employer?
- Have you ever been late with your rent payments?
- Do you play loud music?
- Do you intend to have many friends over and/or parties?
- Do you smoke cigarettes or marijuana?
- Do you have a drug habit?
http://www.equalityrights.org/cera/docs/hrguide.htm
This link provides you with a guide as to what questions you are allowed to ask as a landlord and what you should take into consideration when considering an application for rent. Please note that each State & Province has its own Human Rights or similar Code. Please make yourself fully conversant on what constitutes discrimination in your locale.
9. Know your Rights & Responsibilities; educate your tenant(s) with respect to Rights & Responsibilities
Where Landlord & Tenant know are familiar with rights & responsibilities there are fewer problems and the landlord/tenant experience is a much more pleasant one.
Visit www.tenantsinfo.com for more information on this subject, educate yourself, and educate your tenant.
A landlord business is more than tenant screening, collecting rent and the onerous tasks that go with it. Education of self and tenants is equally as important.
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Minimize Risk
Landlords that want to minimize the risk of renting to bad tenants have a plan that incorporates a due diligence process called tenant screening.
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Trade your tenant debt for cash and slash your collection costs.
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