Screening the credit histories of potential candidates who want to live in your rental properties is an important step in the application process. It will help ensure that you receive your rental payments on time. Luckily, getting a copy of your applicant's credit report isn't difficult, as it can be done right on your computer. By following a few rules, you can obtain the report in just a couple of minutes, which can save you a lot of hassles later.
View the candidate's credit profile. Pay special attention to collections, default accounts and public notices. Has the applicant filed for bankruptcy recently? Has he defaulted on other rental leases? Is he currently behind on credit card payments? Determine the applicant's overall creditworthiness.
Choose a company that will provide you with credit reporting services that apply to your circumstances. Many companies have websites that let landlords view potential renters' credit reports. Some popular ones are citicredit.net, onlinerentalexchange.com, tenantverification.com and MrCreditreport.com. The packages offered by each company vary greatly. Some offer unlimited tenant credit checks for a monthly fee, while others offer pay-per-report services. If you own many rental properties, you might want to sign up with a monthly-fee service. If you own only one or two properties, you'll probably want to choose a pay-per-report service.
To offset the cost of pulling a tenant's credit report, you may want to consider charging a nonrefundable rental application fee to each applicant. Advise your applicants that the fee will not be returned to them if you decline their applications. Don't worry---this is standard practice.
Notify the applicant in writing if he does not pass your credit standards. The Fair Credit Reporting Act requires you to tell the applicant in writing he is being turned down as a tenant because of information contained in his credit report. You must include in your letter the name, address, telephone number and website of the credit agency that furnished the report. Under the Fair Credit Reporting Act, the applicant can obtain his report for free after being turned down by a landlord.
Prepare a rental application and have potential candidates fill it out. The application should include the applicant's full legal name, current and previous addresses, telephone number, date of birth, Social Security number, names and telephone numbers of current or previous landlords, personal references, and employment and income verification information.
The rental application should also say you intend to run a credit report check on the applicant. The Federal Trade Commission's Fair Credit Reporting Act says all applicants must be notified in writing that their credit reports will be considered as part of their application.
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