In this article, I will explain to you how to do background checks on tenants in the right way.
It’s important to screen tenant thoroughly before allowing them to sign a lease if you want to make sure you’re getting the best and a trustworthy renter.
An intensive screening process guarantees that the potential tenants are dependable and appropriate for tenancy. Without legitimate screening, landlords run the risk of putting poor-quality tenants to live in their property. This can ve a very costly mistake.
Being mindful of the past actions of residents make you a more knowledgeable landlord and lets you answer primary questions.
How to Do Background Check on Tenants? [simple but Effective Ways for You ]
1.Financial Information/Employment Information
Income verification is a must It helps you to understand if they are capable of paying rents from their current employment level or not.
Okc Home Realty requires that a tenant’s take-home pay be three times the rent. We require the tenants to submit pay stubs or bank statements as proof of income. We don’t just take their word for it.
Questions to consider :
2. County And State Criminal Records(Nationwide):
Okc Home Realty also checks the criminal background of all tenants. We not only check the Oklahoma records, but also from all 50 states.
We look for patterns:
- If there was criminal activity, how long was it? Many times people acted foolishly when they were young and got into some trouble. But now they are grown up.
- Are you sure you have the person? If the a applicant has a common name like John Smith, chances are there are dozens of criminal records that come up for that name. It may be a nightmare to try to figure out who is whom in that case.
- How serious are the offenses? If all that comes of are speeding tickets, its not that big a deal.
3. Previous Landlord Reference
It is very important to take previous landlords’ references in the background checking process. OKC Home Realty sends a r=written request to the former landlord. Here are some considerations:
- Not all landlords tell the truth about their tenants. They may say good things just to get rid of them.
- Sometimes we have the opposite problem. A landlord may refuse to provide a reference because they are trying to prevent their tenant from moving.
- We generally won’t rent to a tenant if they can’t provide a convincing story about where they lived for the last year. If they can’t provide that landlord reference, we usually won’t rent to them. There are exceptions, but the stories need to make sense and be backed with evidence.
4. Eviction History
An eviction on a tenants records isn’t an automatic no unless it was within the last year. If a tenant does have evictions on their record, They had better be squeaky clean in other areas. Okc Home Realty does a background check that includes a search for evictions in a 50 states.
Eviction records may contain some or more of the following information:
Recommended Article : Oklahoma Eviction Process
5. Interview the applicant in person( A Bad Idea)
In my opinion, personal interviews are a bad idea. The application and associated materials should speak for themselves. You run the risk of running afoul of the Fair Housing Act by giving one set of applicants a leg upon another based more on appearance than strictly their credit worthiness, which should be the sole basis of the screening.
6. Obtain credit reports
Okc Home Realty doesn’t have a minimum credit score to approve an applicant. Here are some considerations:
- A Tenant with a credit score in the 550 range( Considered to be terrible credit) may have that due to unpaid medical bills but have an excellent track record in terms of paying rent.
- A credit report may show that a prospective tenant is up to their eyeballs and then some in debt and therefore may be a poor credit risk for your property.
A credit report has all sorts of useful information such as foreclosures, bankruptcies, illegal detainer cases, and evictions.
It also shows the history of loan payments and the status of their credit accounts. You can access credit reports electronically from the three major credit reporting bureaus like:
Okc Home Realty runs a credit report on all prosceptive tenants.
→Request Credit Report Authorization: In order to legitimately collect the upcoming applicant’s credit records, the landlord obtains the tenant’s permission to run a credit check.
Important factors to consider while obtaining credit reports are:
7. Make A Decision
Go back to the very beginning where you started your entire process of checking a tenant’s background to determine whether a prospective tenant is a match or not.
In the end, as a landlord, you’re the one who knows everything about your property. You have the opportunity to be versatile as an independent landlord, but do not feel like you need to hurry the process.
Consider each point you’ve noted down or learned about the tenant and check if there are areas with flaws and if you could change them or not. If you can make sure that you’re able to convince a tenant regarding these flaws, you can move a step further.
You can also screen more potential tenants with a simpler screening process from “SmartMove” so that you find the best match without sacrificing any of the important steps. Choosing the right online tenant screening service implies that you can trust accurate information.
Websites such as “SmartMove” provide you with a tenant:
⭐ crime report
⭐ report from Income Insights
⭐ResidentScore, so that you can feel more secure about your tenant decision.
Important factors to consider:
How many years back can landlords go during background checking of tenants?
Information is deemed redundant if, for negative information or for bankruptcies longer than 10 years, it is more than seven years old. For a landlord to have a blanket policy of refusing to rent to someone with a criminal record may be a breach of the Equal Housing Act.
Does a good credit score automatically mean that the tenant is a low credit risk?
No, you should never approve a tenant-based only on their credit score only.
What are most important items on a tenant screening?
Income verification, a good landlord reference and a background check( Credit civil and criminal).
Why is it better to have a property management company do the tenant screening?
A property management company should be able to avoid committing any Fair Housing Violations in the process of advertising and screening applications. They will also be more objective and a better judge of credit risk.
As a landlord, the screening process is not an easy job. You have to give your property to someone who’s capable of handling your property. All these steps mentioned above are the most effective ways to do a background check on a tenant and find the best tenant for your property.