Tenant screening is one of the toughest challenges landlords face. An undesirable tenant poses great risk to a landlord’s investment in the property and to the safety and well-being of neighbors.
Although background reports don’t tell a person’s whole story, by doing a credit and criminal check on a prospective tenant you can increase your chances of finding one who pays her rent on time, takes care of your property and treats her neighbors with respect.
1: Decide whether you’ll use credit reports or credit decision reports to screen tenants. Credit reports are issued by the three major credit bureaus: Equifax, TransUnion and Experian. The bureaus require that anyone who orders a retail credit report for another individual be credentialed. Credentialing is not required for users of credit decision reports, which use a computer algorithm to determine the creditworthiness of a prospective tenant and then issue a recommendation to the landlord about whether the tenant should be accepted. The landlord sees fewer details in a decision report than in a credit report.
2: Hire a tenant screening company, through which you’ll access the credit and criminal background reports for a fee. Typical fees range from $20 to $35 per report, depending on the reports you request. Possibilities include credit, criminal background and eviction reports. Tenant screening companies can be found online or in the phone book.
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3: Follow your screening company’s procedure for credentialing subscribers if you choose to use retail credit reports rather than credit decision reports. Credentialing requires that you give the screening company a copy of your driver’s license or business license; prove you own the property for which you’re qualifying the tenant; show articles of incorporation, if you are incorporated; verify your status as a real estate owner, or provide proof of your business status; and submit to an inspection of the location where the credit reports will be kept and stored.
4: Give the tenant a rental application to fill out. The application must include the tenant’s Social Security number and acknowledgment that by submitting the application the tenant gives the landlord permission to run a credit check. You may not do a credit check without the prospective tenant’s written permission. Regardless of the cost of the credit and background reports you order, California landlords may not charge an application fee of more than $42.06.
5: Follow your screening company’s procedures for running the credit and criminal reports. The process involves filling out an online form with the prospective tenant’s name, current address, date of birth, Social Security number and any other information requested.
6: Prepare a summary of the credit report if you are not the decision maker and the decision maker is not certified to order retail credit reports. Certified individuals and companies may not share the reports they order on behalf of an uncertified landlord; they may only summarize the reports’ findings for the landlord.
Source: homeguides
