Any business venture as a rental property owner comes with a certain degree of risk. Fortunately, there are steps to help reduce the risks you take when allowing others to live in your rental home or apartment unit.
Along with requiring a security deposit and an additional month’s rent, you can run a credit check on potential tenants as a pre-emptive step to help ensure timely monthly rental payments and a well-tended space. Without conducting a credit check, there is no guarantee that your prospective tenant is giving you all the information needed to make the best information to protect your interests.
Read on for more information on how to do a credit check on tenant applicants.
1. Obtain Necessary Information and Permission From the Applicant
Along with each tenant’s application, request that he or she grants permission to conduct a background check. You can embed this request in your standard application or create a separate request form. In either case, here are some vital steps to take to make sure you can legally perform a credit check:
- Ensure that each tenant applicant is 18 years or older.
- Request information including full name, birth date, Social Security number, previous address and landlord contact information for the past two years.
- Let applicants know clearly on the form that you intend to run a credit check, providing a signature line for them to authorize you to do so.
After obtaining this information, use it to your advantage. Confirm basic details by requesting a copy of the individual’s identification — such as a passport or driver’s license — to check his or her birth date and photo to know what the person looks like, per DMV records.
Additionally, contact the applicant’s current landlord to verify that the applicant lives there and ask what kind of tenant he or she is. While these steps don’t replace a credit check, they let you know whether you are on the right track.
2. Request and Collect a Non-Refundable Credit Check Fee
Most seasoned home or apartment renters understand today’s typical rent application process, including paying a non-refundable application fee. Set a standard fee based on your credit check providers’ fees, credit reports from the various credit bureaus, and accounting for any administrative handling in your office. The typical fees landlords require fall between $30 to $50 per applicant.
3. Verify That You Are the Legal Owner, Landlord or Management Company of the Property
One important aspect of learning how to run a credit check on a tenant is guaranteeing that you are who you say you are. Providing a credit bureau or background screening professionals with your information and full transparency is as important to them as it is for you to learn the same about your potential tenants.
Here are a few basic details you will need to provide:
- Any document verifying your current address as a landlord or property management company, such as a utility bill
- Proof of identification, such as a driver’s license or passport
- Confirmation that you own the rental property — such as a mortgage statement, deed, proof of title, insurance documents, purchase agreement or utility bills
4. Run and Review the Credit Check
Once you find a reliable credit check company, give it all the applicant’s details, and let it contact the credit bureaus and past landlords. With companies such as Global Verification Network, you can trust that we stay up to date regarding all the laws and regulations associated with running a secure credit check on your future tenants. Credit check findings to review and analyze to calculate your risks include bankruptcies, chronic late payments, unpaid accounts and any listed eviction history.
Let Us Help Screen Your Tenant Applicants
Global Verification Network knows the value of background checks and tenant screening. We want to help streamline your credit check process, so you can confidently and quickly approve quality, trustworthy tenants.
Contact us to learn more about how we can help you conduct thorough credit checks on tenant applicants.