Checking tenants’ credit checks is a time-consuming job even for experienced landlords. When landlords do a good job maintaining and managing their rental property, the property value rises. When the property value rises prospective tenants will instantly grab the chance to get a unit in the property. It is an important job for landlords to do credit checks because this will determine the quality of the tenants in the property.
Judging a book by its cover is inadvisable for landlords and this is where landlord credit checks are for. This process determines whether prospective tenants will pay rent on time or whether they have bad credit.
Landlord credit check to keep
What do credit checks tell you? Is it that important for landlords to do these things? Here are some of the information landlords should know:
All prospective tenants have their records and it is the landlords’ job to examine these records because it contains valuable information with regards to the property safety such as tax liens, bankruptcies, evictions. Knowing this information will help landlords to know whether to approve or disapprove prospective tenants.
Nowadays, because of the internet, it is much easier to check the prospective tenants’ accounts. Important accounts such as bank accounts, credit card accounts will help landlords determine whether their tenants are in the middle of a financial crisis or not. This will also help tenants to know whether their prospective clients are amid a loan or not.
Identifying the information is important because it can confirm whether the identity of the client is real or forged. Important information in identifying are:
- Name of Spouse (if married)
- Birth date
- Current / Past Address
- Mobile Number
- Employer’s Name (if employed)
- Company Name
- Company Address
This information will show which people also requested the tenants’ credit report for the past years. Valuable information landlords need before running credit checks.
Landlords should remember that the application form they give to their tenants must at the very least include the following;
- Current Landlord
- Current Employer
- Date of Birth
- Social Security Number
- Past Addresses ( 2 yrs. at least )
- Tenant Full Legal Name ( Written in Birth Certificates )
Landlords are allowed to do credit checks on their own. They should consult and ask for the tenants’ permission first to avoid invading the tenants’ privacy. Include an application form so tenants can review and approve it. They can also follow guidelines written in the Fair Credit Reporting Act.
Obligations Of Landlords before Credit Checks
Proof Of Ownership
Rental property owners in Hudson Valley do credit checking on their prospective tenants, they should provide a little list of information to prove they own the property. Such information is demanded by credit checking companies.
Landlords need to provide proof of ownership such as proof of title, mortgage statement, insurance document, deed, etc. This is to prove that they own the property.
Proof Of Identification
Landlords should also provide credit checking companies proof of identification. A good example of this would be passports and driver’s licenses.
Proof Of Billing
This is required by companies because this verifies if landlords are paying bills on the property addresses they put in the forms.
Things To Remember In Credit Checking
There are many important takeaways in credit checking and here are some of them.
- First impressions aren’t everything and landlords should do a screening of all prospective clients regardless of their behavior, looks, etc.
- Landlords should always get written consent from prospective tenants before doing the credit checks.
- Approval from credit checking companies is a must because this determines whether the landlord is eligible to do it.
- After refusing a tenant, sending an “Adverse Action” to a prospective tenant is a must-give if the client is someone with bad credit.
- Avoid getting sued by always following the FCRA ( Fair Credit Reporting Act )
- It is always right to put every transaction into a paper to protect yourself
- The credit checks should be put in a secure place to show them to tenants when being accused of discrimination.
- Choose a good credit checking company with a high reputation.
- Background checks & credit checks are not the same things. Background checks are more specific. A similar thing about them both is that they both need written consent from prospective tenants.
- Landlords should set an application fee. This will help them see who’s willing to pay the fee. Prospective tenants with good credit will not be afraid to pay the application fee.
Credit checks are there to protect landlords from having tenants with bad credit in their properties. Landlords should always remember that their property is their asset and tenants with good credit will help them improve their properties by paying rent on time. Tenants with good credit will always keep landlords’ property in good order.