Tenant background check. For most landlords, property management companies, and time-pressed realtors, it boils down to one simple thing: credit. Is it good? Is it bad? Approved or denied.
In reality, credit is of course incredibly important, but it is hardly the only contributing factor to determining if a tenant is fit to handle what is often the brunt of your assets, your property. Criminal history, for instance, something generally obtained from a different resource than credit scores, also plays a tremendous role. Eviction history is an immense part of a tenant’s background check and report, and it too generally comes from somewhere different than both credit scores and criminal histories.
And those are just the basics. Really, there are at least three signs that absolutely MUST be considered when a prospective tenant’s rental application finds its way into your hands (or into your inbox):
Something seemingly so simple is often neglected by even bigger property management companies. Has your possible tenant been evicted before? Just like criminals are more likely to commit second and third crimes, so too are formerly evicted tenants likely to be evicted again. How likely? According to Transunion, THREE TIMES AS LIKELY.
Many landlords, realtors, and property management companies may gloss over eviction history because they assume it’s in the credit and tenant background check. Those landlords, realtors, and property management companies would be sadly mistaken. That information is only included in a typical tenant background check if monetary judgments result from the eviction. This means evictions are often left out, thus misleading both landlords and brokers (and whoever else happens to be looking for an eviction history on a tenant background check).
The eviction report you should run, the type TenantEvaluation does run, pulls information from national databases of court records & covers the following:
-Tenant judgments like those found in credit reports
-Refusal to provide rent payment
-Eviction notices and warrants
A tenant evicted once is three times as likely to be evicted again. It isn’t worth the stress and money of an eviction to neglect this most basic of information.
You may very well know the basics of credit reports, like a great score is over 680, a good one is between 600 and 680, and poor is pretty much below that, according to Experian anyway. What you, and what many, fail to analyze is how much debt does the prospective tenant have? Do they have a history of late or missed payments? Have they recently sought out a new line of credit?
These vital questions directly impact their ability to meet your rent on time and are fixtures in an accurate tenant background check. They are not necessarily deal-breakers, but they certainly help shape your opinion of an applicant’s ability to afford your rent, and by extension, maybe your mortgage. Don’t rely on shoddy finances simply because you like or know someone.
Your tenant is paying for your lifestyle and maintaining your property. Make sure they can handle such with a proper tenant background check.
Bankruptcy may honestly seem like an immediate reason to reject an applicant, and while we at TenantEvaluation are all for playing it safe, we are also all for giving people a chance. Bankruptcy, at first, implies an inability to meet financial obligations.
However, it is important to evaluate said bankruptcies on an individual basis. In fact, if the bankruptcy has been fully discharged, it behooves you to focus on the applicant’s most recent credit score, their income as of now, and their current outstanding debt. It’s very plausible a prospective tenant declared bankruptcy, learned their lesson, and now represents a lucrative source of income for you.
Evaluating tenants is of the utmost importance when it comes to protecting your future and the future of your property. Pay attention to credit reports (all of the credit report), but also take into account criminal histories, rental histories, and eviction reports.
Fortunately, TenantEvaluation does all that and more for you for FREE. Plus, it combines all of the above information into a single easy to read report for you with all the information your heart could desire and provides a recommendation on top of that. For more tips, tricks, tenant background checks and free tools you can use to manage your every day, visit our blog.