Finding the right tenants is key to any profitable rental business. Here are some tips that make tenant screening easier and more effective for landlords:

1. Tenant fraud is a real and growing concern for landlords. The best way to expose fraud is to catch it early. For that reason, savvy landlords and property managers withhold the rental application until they have seen an applicant’s photo ID. Without that baseline, there is no way to know that the information provided pertains to the applicant. The ID also provides personal info — legal name, birth date, address — that can be compared to the completed rental application to flag identity theft and others acts of fraud.

2. By reading the rental application first and then verifying the information provided, including contacting references, a landlord can determine if an applicant is unqualified before running tenant screening reports. That way, the landlord will not be required to send an adverse action notice, and the applicant can continue the housing search without having wasted time on a property that is out of reach.

3. Running the applicant’s credit is important, but screening using a threshold credit score is not always effective. The credit report flags irresponsible financial behavior like chronic late payments and defaults. And while good credit is characteristic of a good tenant, it is not the only qualification. Previous evictions or a poor rental history may not impact credit but may disqualify the applicant. A tenant can have 750 credit and still be a jerk.

4. Prior evictions are a deal-breaker for many landlords. That’s because an eviction signifies a tenant who broke the rules or failed to pay and yet refused to move out.

Unfortunately, tenants can fall through the cracks on eviction reports by moving to a new location before the eviction is finalized. Look for warning signs that an eviction is ongoing:
Tenant asks you not to contact the current landlord;
Tries to discredit the current landlord;
Is moving mid-lease; or,
Wants to move in right away without a plausible explanation.

For past evictions, in addition to running an eviction report, look for evictions that were never finalized — because the tenant moved at the last minute. Ask the applicant to provide previous addresses and look for gaps. Confirm the dates of previous rentals when speaking to the references. And always speak to the previous landlord references before renting to any applicant.

5. Criminal history is becoming increasingly regulated by both federal and state governments. For instance, landlords no longer can ask an applicant to report arrests that did not lead to conviction. Not all crimes impact housing, so landlords cannot apply a blanket ban on all criminal history. Before disqualifying an applicant based on past crimes, several factors should be considered when weighing the likelihood of recidivism. Because minorities are more likely to be arrested, convicted, and to serve longer prison sentences, rejecting these applicants for crimes may be considered discrimination. If the applicant does not meet other qualifications, there is no need to investigate criminal history. For these reasons, it is best to run criminal history as the last step in the tenant screening process, after determining that the applicant is otherwise qualified.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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When the information in a credit, eviction, criminal history, or other investigative report provided by a tenant screening agency negatively impacts the landlord’s decision regarding an applicant, that applicant is entitled to notification. This is referred to as an Adverse Action Notice.

Examples of impacts that require notice include:
Rejection of the applicant;
Requiring a co-signer; or
Increasing the rent or deposit.

If any such actions are taken, the applicant is entitled to receive notice that outlines their rights, including:

The contact info for the consumer reporting company that supplied the report;
A statement that the company that supplied the report did not make the decision to take the unfavorable action and cannot provide specific reasons for it; and,
Notice of the person’s right to dispute the accuracy or completeness of any information the consumer reporting company furnished, and to get a free report from the company if the person asks for it within 60 days.

The purpose of the notice is to give the applicant a heads-up that something negative appears on their records, and to provide them the opportunity to correct information that they feel is inaccurate.

This notice can be provided electronically, in writing, or verbally. However, a written record is suggested to prove compliance with this law.

The Adverse Action Notice is required in any case where the consumer report¬† like credit, eviction,¬† and criminal history influenced the landlord’s decision in any way. The information need only be one factor the landlord considered. So, if the landlord runs a credit report that is bad and also determines the applicant’s income is inadequate and subsequently rejects the application, the landlord will need to provide an Adverse Action Notice.

This notice requirement is a small price to pay for information that helps a landlord prevent income loss from an underqualified or problem tenant. Many landlords and property managers create a fillable template for the Adverse Action Notice which streamlines the process.

Because this rule applies in cases where the landlord accesses consumer data, the best way to avoid this requirement is to verify the information in the rental application first, before ordering tenant screening reports. That eliminates prospective tenants who don’t qualify for basic reasons like insufficient income or bad rental history — applicants who would be rejected with or without the reports.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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