Online Credit and Criminal Checks
Want a tenant that is problem free and pays the rent on time? Of course you do!
Proper Tenant Screening is central to your success as a landlord. Bad tenants can really ruin your cash flow and can turn you off from what should be a successful endeavor.
Luckily with the advent of the internet, tenant screening has gotten much easier.
The first thing you want to do is a Credit Check and Criminal Background Check. I HIGHLY RECOMMEND an easy online service called Smart Screen.
Here’s how it works:
When a prospective renter (applicant) wants to apply to rent your property, you just get their email and put it in Smart Screen. Smart Screen then emails this applicant asking them for their sensitive information (Social Security Number, etc). It then runs the criminal background check and pulls a credit report from TransUnion. You then get notified and can login to see the results. It’s easy and seamless! It’s also FREE to set up.
What To Look For on Credit Report
We all know that renters are not known for perfect credit. So what should cause you to deny an applicant? Credit Card Debt? A medical bill? A repo? Judgments from past landlords?
That last one should definitely cause you concern! What you want to look for are indications that this applicant cannot meet their day-to-day obligations, such as car payments, utilities, and landlords. Unsecured Debt is okay if not in serious default. Medical Bills are okay too. But if this applicant consistently cannot pay their normal bills, you don’t want them.
Criminal Background Check
I once rented to a guy whose criminal history showed possession of marijuana and resisting arrest. I imagined that maybe when he was young he got caught with weed and argued or struggled with the police. I wasn’t sure if I should rent to him. I did. And guess what? He stayed in this house for 8 years and ALWAYS paid the rent on time.
We all make mistakes, and the law is applied unfairly (as a lawyer I can confirm this). If an applicant was convicted of rape, murder, violent crimes, or something that you are uncomfortable with, deny them. But don’t lose a good renter because they made past mistakes. You’re not marrying the person, you just need them to take care of your house and pay the rent on time!
Why to Check Prior Rental History
Quiz: When asking for prior rental history, what’s more important? A. Current Landlord? or B. Previous Landlord (before the current one)? B! The current landlord might want them OUT. And the current landlord might not have seen their trashed out place yet, or might not have gotten stiffed yet on last month’s rent. The PREVIOUS landlord will have much more insight on this stuff.
Out of laziness, I used to not check previous landlords as part of my tenant screening. But once I started, I realized the value. One time I called the name and number the applicant had put down for previous landlord. This “previous landlord” answered the phone and really had trouble answering my questions. He finally said, “I have a confession to make. I’m an honest person and I cannot lie. I am not a previous landlord. My friend asked me to lie for him.” I obviously was glad I made that call, and of course I did not rent to that applicant.
This is huge. Applicants can write anything on an application. But you need to see the proof. A bank will not extend credit without seeing pay stubs or tax returns, and neither should you. You MUST insist on getting proof for all sources of income the applicant says they have. You will be surprised when you ask for this stuff. Sometimes they will come up with pay stubs that show plenty of income, and sometimes you will never hear from the applicant again!
Thousands of Dollars At Stake
You can be lazy and not screen your applicants, which will lead to many expensive problems and lost money over the course of your landlord career. Or you can be smart, and do the four simple things I discussed: Credit Check and Criminal Check, Prior Rental History, and Income Verification. Trust me, doing these 4 simple and inexpensive things will result in many thousands more dollars in earnings for you!