Gathering Information from the Tenant
Require potential tenants to complete a rental application. You can obtain sample rental applications online or from your local real estate association. The application will furnish you with all the necessary information to conduct a background check and assess whether the applicant would be a good tenant. The rental application should ask for: the applicant’s full name, social security number, date of birth, contact information, and driver’s license number and state of issue (also, make a copy of license). current and previous addresses, dates of residence, contact information for current and former landlords. current income, dates of current and past employment, the names and contact information of current and former employers. banking and credit references for a credit check. contact information for three personal references.
Request potential tenants complete a credit report authorization form. Section 604 of the Fair Credit Reporting Act (FCRA) requires landlords to ask permission to perform a credit check. In order to comply with the FCRA, you must have a completed credit report authorization form before obtaining an applicant’s credit report. If a potential tenant refuses to sign a credit report authorization form and allow for a credit check, you can deny him or her the ability to rent the property.
Interview the applicant in person. This is someone that you could interact with frequently, from paying the rent to addressing maintenance concerns, and you want to make sure they are friendly and respectful and that you are comfortable with them as a tenant. During the interview ask of potential tenants: Why are they moving? Do they have any pets and are they housebroken? Do they smoke? Indoors or outside? Who else will be living with them now or in the future? Do they have any friends or relatives who frequently spend the night? What is their typical work day like? Do they work nights? Can they pay the first month’s rent and security deposit before moving in?
Executing the Background Check
Obtain credit reports for the applicant. A credit report will help you identify tenants who are financially stable and reliable. On the credit report, you will see information about any foreclosures, bankruptcies, unlawful detainer lawsuits and evictions. Each credit company will provide a credit score for the tenant demonstrating the financial reliability of the applicant. A typical credit score required for renting an apartment is over 620. Credit reports can be obtained online from the three major credit reporting bureaus (TransUnion, Experian and Equifax) by setting up an account online and following the instructions for making a request. If you deny an applicant because of negative information on a credit report, you must send the applicant 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.
Pull a background check on your applicant from a verified tenant screening company. The background check will show a number of things like any criminal record, including running the name on the sex offender database, whether he or she ever damaged any property and whether they paid rent on time. You want to find honest rule-following tenants, and this will help you identify them. Under the FCRA, you must use an approved Consumer Reporting Agency to obtain a background check on a potential tenant. The Consumer Finance Protection Bureau has compiled a list of approved CRAs for tenant screening. Tenant background checks can run anywhere from $20 to $50, depending on the items selected to screen. You can request tenants to pay an application fee that will cover the cost of the background and credit checks.
Contact the applicant’s employer. This is an opportunity for you to verify that the employment and income information the applicant supplied is true and determine if the potential tenant is able to pay the rent. For example, ask: Is the person employed by you, and for what length of time? Does the person earn a fixed salary? Is this a full-time or part-time job? What is the person’s current wage?
Contact the applicant’s previous landlords. This is your chance to demystify the applicant. Previous landlords can tell you about the person as a tenant. Ask them: When and how long did the person rent a property from you? Did they pay the rent on time? Did they break the lease agreement in anyway? Did they cause any property damage? Were there any complaints from other tenants or neighbors? Why did the lease end? Would you rent to this person again? ?
Contact the applicant's personal references. Though friends and family will have some bias toward the applicant, they have also known him or her for many years and will be able to inform you about the applicant as person, providing information about their character, demeanor and manner. Ask these references: How long they have known the applicant? Do they deem the person to be reliable? Would they recommend this person as a tenant to a landlord?
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