“What Does The Rental Background Check Cover?”
Are you familiar with conducting a rental background check?
Every property manager should have an idea of a good rental background check.
Before you decide to let a tenant rent your property, you should get the information needed through a background check process that allows you to know who they are. A rental background check will help you evaluate their financial and rental history so you know if they can afford the rental you are offering.
In an effort to avoid bad tenants, you should develop set criteria to follow so that you can evaluate and understand the important reports you should get from an applying tenant.
This article reveals the details you need to know about how to do a good rental background check.
Reports That Rental Background Check Should Cover
A potential tenant should undergo a rental background check before you make the decision to rent the property you are offering. During the rental application process, they should agree to authorize in writing that the landlord or the owner of the property has the right to check important information about them.
There are a lot of companies, offline and online, that are offering services for checking the tenant’s rental background. Though all of them will have a different format, the information on their reports will essentially be the same.
Here are what a rental background check should cover:
Rental background checks will produce a report on rental history that will reveal information about previous addresses and landlords for the applicant. Late payments on monthly rent and eviction histories could also be included in the report.
As the property manager, it is advisable to focus on the applicant’s rental history records and ask the applicant directly for any inconsistencies or issues that you found. You should be careful and use alternative sources like the internet when you verify previous landlord’s phone numbers and information so that you know you are speaking with the actual person.
A rental verification and reports on payment history will also give you an idea of how the applicant would possibly behave on your property. By contacting the previous landlords, the character and habits of the applicant could be revealed.
Along with the rental history report, a credit report is perhaps the most important part of the rental background check.
Make sure you get the proper authorizations signed to do a complete credit check when they are filling out and signing rental application documents.
Most rental property managers check the credit report of the applicant first. A credit report reveals if the applicant is financially stable and capable of paying monthly rents on time. Most rental property managers will deny applicants with a significant amount of debt.
However, a small number of late payments on the report are sometimes acceptable as long as the cause of the delayed payment is reasonable.
The applicant’s work history is an important and significant part of the rental background check.
Most background check reports will include information about the applicant’s salary and the ability to hold a job and pay their debts on time. If the rental background check reveals negative items, it is best to get the applicant’s response (justification or “excuses”) prior to deciding if they are not a good renter to rent to. If you are able to verify that the applicant is currently employed by a good company and earning a large amount of money this is a positive factor in deciding to rent the property to them.
The rental background check will reveal if the applicant has a criminal history. Most rental property owners will reject applicants with criminal records. Depending on the criminal offense noted, if it was a DUI or Assault, that will weigh into your decision to approve or deny them from renting the property from you. However, the law states that applicants with a criminal record are still eligible for renting a property as long as they are not convicted. So you need to be careful and fair when evaluating criminal offenses revealed in the reports.
The ideal tenants for the rental property should not have any negative items on their reports. Their background reports should not include any eviction, bankruptcy, or criminal records.
The right tenants should also have perfect credit and lived responsibly on their previously rented properties.
Information Needed To Conduct A Rental Background Check
The rental background check is used to protect the rental property business. By using the information in the report and conducting the correct rental evaluation procedures, the chances of having a bad tenant in your property will be reduced.
Here is some of the information that you need to perform a background checking report.
Social Security Number
The applicant’s social security number is required when conducting a credit check. A credit check will reveal almost all of the bills that the applicant is currently paying. Previous payments and debts are also included in the credit report.
Don’t risk approving a tenant who is not capable of paying monthly rent on time. The reason for getting a credit report is to know the applicant’s financial situation and their behavior in spending money and paying their bills on time.
To avoid fake tenants, it is important to verify the identity of every applying tenant on your property. Requiring the driver’s license of the applicants could help you in verifying their identity. It’s always best to make a photocopy of their license and keep it with rental documents.
The applicant’s credit could also be checked by using their driver’s license number.
Another way to confirm the identity of the applicants is by verifying their employment history.
Employment verification will include a letter from the employer to verify the applicant’s employment. The hourly rate, monthly salary, and behavior of the applying tenant will also be discussed.
Another way to verify employment is to have the applicant produce their most recent pay stub, this will help to verify earnings and employment status.
Copy of Current Utility Bill
Requiring a current copy of their Utility bill will reveal address and information needed to verify where they are presently living.
You should note that if they can’t give you a current utility bill they could be trying to avoid you speaking with their current landlord. Anyone could pretend to be a landlord. Some applicants use their friends to pretend that they are the applicant’s previous landlords to help ensure positive feedback and references to the prospective landlord or property manager.
To avoid this fraud, it is advisable to require the most current utility bill from the applicants to verify the name, contact information, and address of their previous landlord. In some states, the water bill has the owner’s name right on it.
Final Thoughts About The Rental Background Check
The rental background check reveals rental history, credit reports, criminal and eviction reports. These are all important elements that you should consider whenever you are evaluating a rental application form. To protect your rental property business from frauds and bad tenants it is best to develop an evaluation system using all the information revealed in the rental background check. This keeps your processing consistent across different applicants.
I expect that this article has helped you with your own rental background check. Please put any questions or comments below.
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