Source: Written by Bryan Mower of FourWalls.Rentler.com
A credible background check by a reputable company could be the most important decision a landlord can make during the entire applicant screening process. Consider the case of a Utah apartment owner who didn’t bother to conduct a criminal history on an applicant because he looked so nice and his credit was impeccable. Three months later, the new tenant was cited by the police for operating a meth lab—his third offense in three years. The cost of cleanup to the owner was over eight thousand dollars.
Cases like this remind landlords and apartment owners of the high cost of a little exaggeration, a material omission, or an outright lie from a prospective tenant on a rental application. Many landlords have made the mistake of relying on personal references to determine whether a person would be a good tenant or not, never taking into consideration such things as debt to income ratios, employment verification, criminal history, social security verification and more. In these cases, the results can be disastrous.
Most landlords have eventually come to adopt a “best practice” procedure in screening all applicants. However, few use the report to assess a tenant’s information in making a credible decision in accepting an applicant as a new tenant. It really is very simple: a good tenant results in better cash flow while reducing risk. Most landlords have come to learn that background checks and credit checks can be rather strenuous, but they’re definitely worth the effort.
Ten years ago, an applicant for an apartment would be evaluated on one criterion: creditworthiness. Today, since a lot of people have poor credit, the pendulum has moved more to other activities such as eviction records, criminal behavior, and work history. Because of this, many prospective tenants attempt to mislead landlords and lie on the application in order to be approved for tenancy. Given the alarming levels at which applicants attempt to mislead, landlords should be constantly reminded that it is critical to verify that information is correct.
The good news is that today landlords have more information than ever before in determining whether a tenant is going to be good or not. Below are a few small recommendations that could help in either preventing renting to a poor renter or better yet, finding that perfect applicant.
CHECK THE SOCIAL SECURITY NUMBER
Most screening companies can provide a landlord with a person’s search identification or Social Security verification. This information provides address history, correct spelling of the name(s), and most importantly, verification of an applicant’s date of birth—all essential in conducting a solid screening.
VERIFY
Only 50 percent of landlords check a potential applicant’s photo ID prior to submittal for a tenant-screening report. Make sure a driver’s license or state-registered ID is verified correctly for three important identifiers: 1) date of birth, 2) Social Security number and 3) spelling of the name.
LOOK FOR ALIASES
Many applicants use names not associated with their true identity. This is referred to as a person using an alias. Make sure your screening service provider includes an alias search as part of their suite of products. Criminal and eviction searches are only conducted by a name or date-of-birth identifier. Social security numbers are only used in conducting a search for financial information such as a credit report or credit score.
READ THE REPORT
More often than not, a landlord may be denying a great applicant based on erroneous or misleading information. Look to see if an applicant pays his/her auto loans instead of judging solely on a credit score. Determine if student loans or medical liabilities are currently encumbering the applicant. Check to see if co-applicants are responsible for some or all liabilities. And finally, make sure their liabilities do not exceed income (debt to income ratio).