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The Screening Process

 

-  This process will help to determine if the applicant will be a good tenant or is unqualified. It is important and requires the complaince with the Fair Housing Standards that all applicants must be treated and evaluated equally and in the same way.  

-  First  reviewed the Rental Application for completeness.   

Next, Review the application: Determine if it is in compliance with the guidelines or  Rental Standards set for the rental such as:   

  • Income:  That the applicant meets with the income requirements. The general guideline is 25 to 35 % of the gross monthly income should equal the monthly income.   
  • Income verification:  In the standards set for the rental,  establish the type of documents that are required or acceptable for income verification such as letter of employment from applicants employer, most recent pay stubs, last year’s tax record, and / or two or three most recent bank statements.   
  • Pets:  First are pets allowed?  In additions to any pet standards and pet policies set for the rental standards there are other guidelines  to consider  that include,  the handicap pet or service animal and are there any pet restriction with your  insurance company.   
  • Occupancy:  When determining the acceptable number of people allowed to occupy a rental unit the following guidelines may apply.

-          efficiency or studio rental unit ……. One (1) person

-          1 bedroom ………………………….  Two (2) people

-          2 bedroom ………………………….   Four (4) people

-          3 bedroom ………………………….   Six (6) people

-          Also important is to check with all Federal, State, and Local occupancy guidelines that apply to the rental. For example some guidelines such as with the Section 8 program may require that if 4 people are occupying a rental consist of  Two adults, and Two children one male and one female than a 3 bedroom may  be required.  Also some local codes may use the sq. ft. available in a rental unit to determine the occupancy guidelines.      

-  Credit reports will contain much information about an applicant’s creditworthiness.  The following are some area of interest a credit report will provide.  

·         FICO score

The FICO score is a numerical score that is calculated by the credit bureau and is based solely on the applicant’s credit report data.  The range of the FICO score is 300 to 850. The higher the score the better. Any score above 700 is considered to be good to excellent, a score below 620 is considered to be a high risk. Sometimes the credit score will not tell the whole story or the full picture, that is maybe an applicant was late on a payment three or four years ago, or for some other reason.  In this case you may want to look at their credit report to further determine the reason for the low score.    

·         Credit History:

The Credit Report will show an applicants payment history, types of credit, amounts owed, and how payments were made being timely or late.  

·         Rental History:

Credit information may at times include rental history and court records such as Judgments, eviction notices and more information that is of public record. 

·         Debt to Income

 The Credit Report will help to identify the debt incurred by the applicant.   In using this information and the income information verified through the screening process you will be able to determine the debt to income ratio by dividing Debt by Income. 

      -   Criminal Background Screening

  Before a Criminal Background Check is preformed the applicant must be informed of the criminal background check and must approve of such in writing. A well constructed Rental  Application will supply the proper wordage and approval procedure that is  required by the applicant.      

·        Criminal Background Check

Records should be check in all states or jurisdictions for at least the past two or three years. The denial of a rental can be based on any felony or designated felonies such as ( murder, assault, rape, sexual abuse etc. ) occurring within a designated amount of years.   

 

-  Running Credit Reports: It is common for landlords to check the credit reports of  prospective tenants before approving them for a rental.   Some applicants may provide their own report however you have no way to determine if the information is correct.   You may wish to run a credit report yourself or have a  reputable online company do the report for you.   Before you make this decision you must first be aware that it is important on how you handle credit information.  All sensitive information such as a credit report is required by law to be lock in a secure place.  Usually an inspection and service fee is required by an authorized inspector to inspect the location and system you use.  An alternative to maintaining a secure location is by using third party screening companies.  Depending on the company of choice some screening companies will  provide only a credit score and sometimes  propose an educated opinion as to the applicants ability as a renter based on their review of the credit report.  Other companies will offer more details and varied price ranges.  Later in this section you may review  some agencies and services companies that provide  credit checks, background checks and more.

 

- The credit report will supply important information to assist in the landlords determination.  Noted above are some of the areas a landlord can deny applicants housing under the Fair Housing Laws.  For example if an applicant has a history of missed or late payments and a poor credit score you may deny the applicant or consider requiring a qualified co-signer or charging a higher security deposit.  If requiring a co-signer you will also need to run a credit check on a co-signer to make sure he or she is qualified.

 

- Before running a credit report on an applicant you must first have the applicants permission to do so along with a completed Rental Application.  Most well constructed Rental Applications will have the proper verbiage granting a release to the landlord to run a credit check. The applicants signature on this release is need to authorize a credit check.  

 

- An Application Fee is charge by most landlords to cover the cost .  This fee is usually non- refundable however some landlords will abate the cost from the rent if the application is approved.  You should not take a rental deposit before checking out their references and do not take a large amount of cash upfront for fast placement in a rental, by passing any type of credit or background checks.  

 

- Below are some Credit Reporting Agencies and Services to consider.  You may prefer to go beyond just a credit report and run criminal background check and eviction reports to evaluate the applicant thoroughly. Review each of the following to determine what type of report or reports will best suit your needs and feel comfortable with.  You may also research the market on your own as there are many agencies and service companies available. Some require a membership fee and some will just charge for the report.

 

·         Experian will offer credit reports from the top three reporting agencies. Experian being one of the top three along with Equifax and Trans Union.  This will give you a complete picture of the applicants credit history because some creditors will report to only one credit bureau.

 

·         mysmartmove.com    TransUnion Smart Move is designed specifically for independent  landlords and small property management companies.  TransUnion offers a unique on-line features that allow the tenant to be screened online and having the results sent to the landlord. The cost for the Application screening can be managed by the landlord or the applicant can pay directly.   TransUnion provides immediate access to a credit report, credit score, detailed rental address history, national criminal report and more.

 

·      TenantVerification.com  ( Tenant Verification Screening ) is a  Tenant Screening Service that offers landlords  many different services if you prefer a more comprehensive report. Along with the applicants credit check you may request additional information on your applicant such as eviction reports, background checks, liens, judgments, and also provides a national criminal records search and more.

 

·       Citicredit.net   Citi Credit Bureau is a comprehensive online Tenant Screening Service offering services to landlords, property managers, and other in the real estate and rental industry. The tenant credit report includes payment patterns and payment history, credit score, SSN validation, residence and employment information. Other services include but not limited to Eviction Report, Landlord Verification, Employment Verification, Criminal Record and more.    

 

·       E-Renter.com  ( quoted statement ) is a Consumer Reporting Agency, and authorized reseller for  Experian, Exuifax, and TransUnion.  We  have 24/7 online direct access to consumer and business credit files as well  as many other databases for credit, criminal, eviction, driving records,  property deed records, assessor records, etc. E-Renter services are used by Individual landlords, Property management companies, Tenant screening companies, Businesses who need employee screening, and Businesses extending credit to consumers.

 

·     aaaCredit.net  ( AAA Credit Screening Services ) Offers full tenant screening, including credit report, rental history verification, employment verification for current and previous employment, criminal record checks, and more.

 

·      amerusa.net  A licensed credit reporting agency for landlords and employers. Access credit reports, criminal background checks, driving records and eviction searches.