Vetting Potential Tenants

Vetting Potential Tenants Using Credit: How And How Not To Use It

Tenants with bad credit are a sign that something may be wrong with their ability to pay rent. If you're worried about your tenants' credit, consider why that might be the case. Is there any evidence of fraud (like unpaid debts)? Are they paying their bills on time? Is there any indication that this person has engaged in illegal activity? If so, you may have to consider whether or not you can trust them with your property.

Why Does Credit Matter?

• Use credit reports as part of a tenant screening process. Credit reports can help you vet potential tenants, but they should only be used as one piece of your overall strategy. Credit checks can be done for free at any significant sites, so there's no need to pay extra money for this service.
• Tenant screening is essential for landlords. Tenants who have bad credit histories may not be able to pay rent on time or might not be able to meet other requirements like having steady employment history or being able to provide references from previous landlords who know them well enough that they feel comfortable letting them in their home without doing additional due diligence first; these people may also have lower incomes than those who do have good credit scores because they don't make enough money working full-time jobs outside their homes either—so it's essential for landlords themselves too!

Don't Use It to Discriminate.

You may be wondering how you can use credit to discriminate against tenants. Well, it's not allowed.

The Fair Housing Act prohibits discrimination based on race, color, national origin, religion, sex and disability.

A landlord cannot deny a tenant based on race, color, religion, sex or national origin alone. However, the landlord can refuse to rent to someone who has been convicted of certain crimes involving violence or guns—for example, burglary with intent (a felony in California), assault with deadly weapons (a felony), attempted murder (usually defined as second-degree attempted murder if there was no injury).

Having said that: a landlord may ask you whether someone has ever been arrested for any crime before and then base your decision on whether they've been convicted of those same crimes--but only if they're asked this question directly by the landlord in person when discussing potential tenants' backgrounds during an application process!

Ask for Permission to Check Credit.

It may seem obvious, but you need to ask for permission before checking credit. If you don't get written consent, the tenant can sue you for invasion of privacy and other violations.

You'll want to ensure that the tenant has signed the form authorizing you to do this check; if not, then it's not legal for them to give permission to investigate their financial status (even if they pay rent on time). Make sure that when collecting rent or taking out a lease deposit from a tenant who hasn't paid in full yet—or even if there is no signed consent form yet—you have an agreement as well as proof that said the deal had been met with each tenant signing off on such inspections by giving them copies of their paperwork regarding any checks made during these visits. Hence, they understand exactly what kind(s) of financial information may be obtained when conducting such searches.

(Re)Check the Credit Report on Time.

The following steps should be taken to ensure that your credit report is up-to-date and accurate.

• Check the credit report before accepting a tenant. Before you apply, make sure there are no outstanding loans on their record. If there are, cancel the application immediately and find another property management company to work with in the future. After they move in, recheck their file—this time looking for any payments or collections that might indicate they're not paying rent on time or getting into financial trouble.
• Check their file periodically after they've moved out of your property (and every six months after that). Again, look for payment information, such as late fees charged by banks when tenants miss payments during their tenancy period; this will give you an idea of whether or not it's worth continuing working with them moving forward!

Take Tenant Screening Seriously.

When you're looking to rent out your property, a credit report is one of the most critical factors in determining whether or not a tenant is suitable for the job. But other factors can affect your decision-making process—and you should consider them before deciding how much weight to give credit reports.

Here's why: First, because tenants don't always pay bills on time and often leave behind broken appliances or damaged property when moving out (which could be costly), having a sound tenant screening system will help protect your investment by reducing risk and helping ensure that no bad apples make it onto the property list. Second, suppose there's one thing we've learned from recent court cases across America regarding landlords' rights under fair housing laws (FHL). In that case, it's that having good tenant screening practices will help avoid problems with tenants before they even happen!

Keep Your Credit Reports (and Tenants) Secure.

It's essential to keep your tenant's credit reports secure. Here are some tips:

• Do not share credit reports with third parties. This includes landlords, property management companies, or other real estate professionals unless they are directly involved in the tenant screening process.
• Do not post them online at any time (e-mailing them is fine), print them out and leave them in the mailbox of potential tenants as a "courtesy" (this is legal), or leave them with a security guard at the building entrance so that they can be accessed by anyone who enters the building. At the same time, you're gone—these actions can lead to identity theft if someone steals your information from those files!

View Bad Credit as an Opportunity to Educate Tenants.

One of the most important things you can do as a landlord is to educate your tenants about their financial responsibilities. Lousy credit may indicate a tenant's ability to pay rent on time and maintain the property. Still, it's also possible they could be dealing with some sudden change in circumstance—a job loss, divorce or death in the family.

If you're worried about how much money your tenant will be able to afford each month when they move into their new home, don't think twice about giving them a chance at being approved for credit by one lender over another (especially if you know exactly what types of loans those cats have been taking out). This way, when it comes time for them to start paying rent each month (or any other form of payment), there won't be any surprises down the road because now everyone knows exactly where those payments should go!

Conclusion

Remember, credit is only one piece of a more extensive tenant screening process. Your credit report holds a lot of information that can help you make an informed decision, but there are other factors to consider. If you have questions about using credit and your rights as a landlord, please contact us for further assistance. You can also visit our website, Leaf Management.