As a landlord, you should know that you couldn’t just deny a potential tenant because you do not like him at first glance. While there are steps to ensure you pick quality renters and steer clear from difficult tenants, you have to be aware that your decision may come back to haunt you. You may not have trouble collecting rent from the lessee you selected but you may eventually receive a lawsuit from someone you denied a rental application. To ensure that the applicants are capable of paying you the rent on time and that you do not have to deal with legal claims in the future for your decisions, employ credit screening that is fair and legal.
- Create a lease application. Make sure to collect the prospective tenant’s full name, any aliases used in the past, contact details, current address, previous addresses, property manager contracts, social security number which you will need for proper credit check, personal references to help you track down history, and other pertinent information. If a person refuses to give this information, you are in the position to reject him outright.
- Convey your standards clearly to the prospective tenant. Apart from the filled out application form, aspects you should take into consideration and should be forthright communicated to the applicant are employment history, minimum income level you require to have your property rented, previous rental history, including timely rent payments, fulfillment of leases in the past, property, and maintenance history, and a credit and criminal background screening.
- Use a legal tenant screening services company. While you can reduce damage to your property, decrease late payments, and eliminate criminal activity in your premises by pre-screening potential tenants, you can cause damage to your business if you do not follow applicable laws. Denying an applicant due to race, gender or sexual orientation, religion, family status, country of origin, or disability, is entirely illegal according to the Fair Housing Act. If you are to refuse a potential tenant, you have to ensure that the grounds are Fair Credit Reporting Act or FCRA compliant. Take note that there are cheap credit background tenant screening services you can find. While they cost much less and some are even free, provide faster results, and check facts, they are only beneficial in verifying basic application information. It is important to know that you should not form your ultimate decision based on the information you can get from them. To avoid discrimination and the possibility of getting sued for rejecting an applicant, you can find online FCRA compliant services with a corresponding fee. An example is E-Renter, a consumer reporting agency used by individual landlords, tenant screening companies, property management companies, and various businesses requiring employee screening, and applying extension of credit to consumers.
If in case the applicant fails on the pre-screening requirement, convey the grounds by which you are to reject the application formally in writing and provide a copy of the credit report as required by the law.