One of the important tools in tenant screening process is credit report. If you believe that it is only the credit score of the applicant that is important in deciding the application of a tenant, you are wrong. A credit report contains much deeper information about the financial past of the applicant than his credit score which is just a number. You should never judge about the trustworthiness of an applicant solely based on his credit score. You could be making a mistake by rejecting the application of a tenant if you find his credit score too low.
Check the personal details and match them with the information provided by the applicant
Go through the personal information of the applicant given on his credit report. Check whether the information mentioned in the credit report match with the details provided to you by the applicant. Is there anything that your applicant is trying to hide form you? One of the clever ways applicants dupe landlords is when they have the same name as given on the credit report, but they happen to be a different person.
How good is his payment history?
Credit report can be a good source of knowing about the repayment history of the applicant. Are they habitual in making payments late or this happened only once or twice in recent past? Look at the way the applicant has paid his utility bills. You want a tenant who pays his monthly rent on time every month. There is a good chance the applicant will likely delay his rental payment to you if he has this habit of delayed payments to others. He may profess timely payment of rent, but it is better to stay away from an applicant who has a poor record in payment of his bills in the past.
Do you see many charges offs?
A credit report sometimes contains charge offs. These are payments that have been written off by the creditors after their nonpayment by the applicant. Beware of these charge offs as they mean that the applicant has not paid his dues to some of his creditors in the past. Reject the application even if the applicant appears to be soft spoken and well-mannered as he will not pay your monthly rent.
Can he afford the rent comfortably?
Do you know the credit report of an applicant also tells you whether he can afford the monthly rent comfortably or not? Add up the monthly debt payments of the applicant and subtract the figure form his monthly income. You now know the amount of money he has for his living. Divide the monthly rent with this amount to arrive at the ratio of rent to income. If this ratio is more than 0.5, you know that it will prove very difficult for the applicant to manage his household expenses and pay your rent on time. Allow an applicant only when you feel he can pay your monthly rent without any discomfort.
Has there been a life altering event in the recent past?
Finally, you should inquire from the applicant if he has undergone a life changing event in recent past. It could be death of parent, spouse or divorce from the spouse. Detection of a life-threatening disease also comes in this category. If the applicant has experienced one or two life altering events in recent past, it can have an adverse impact on his credit score. You need not be too harsh to reject the application based on low score if the applicant has gone through a life altering event.
Property Management Service Areas