Tenant Screening 5 Step Process

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Tenant Screening  5 Step Process

Between 2007 and 2013, there was a nationwide rise of 6.2 million tenants.  That’s a lot of new tenants each of which needed to be adequately and fairly selected.  It is best to create a systematic approach to tenant selection by utilizing a Tenant Screening report.  Tenants with a past history of not paying rent, poor credit or a criminal record are more apt to repeat their prior behaviors.  Tenant Screening reports are readily available at a reasonable cost and can help protect your investment and safeguard your community association or neighborhood.

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) allows property owners, property managers and homeowner associations to require a Tenant Screening report of their applicants.  Tenant Screening companies, also known as a Consumer Reporting Agencies (CRA), can order Tenant Screening reports and help comply with forms required by the FCRA.  The Tenant Screening report can include criminal records, a credit report, eviction history, identity verification and search sex offender databases.

Tenant Screening Application Process

Ask the applicant to fill out a Tenant Screening application.  The Tenant Screening application will ask the applicant to provide current contact information, social security number, date of birth and previous landlords and employers.  They will sign the application attesting to its accuracy. You may collect a fee from the applicant and explain to them the fee is non-refundable even if they are rejected.  The Tenant Screening process can be categorized in these 5 steps.

Step 1  Regulatory Documents

Prepare the required regulatory documents.  The CRA will help you comply with the requirements of the FCRA.  You must obtain the applicant’s consent to order the Tenant Screening report.  The applicant must be provided with the proper disclosure and authorization form.

Step 2  Ordering the Tenant Screening Report

Order the reports.  I suggest including a credit report with a FICO Score.  The FICO score will grade the applicant’s credit history and indicates an applicant’s risk of default on payments.  A consistent process ensures fairness and can mitigate potential discriminatory lawsuits.  It is preferable to run the credit report through the CRA rather than asking the applicant to supply their credit report.  Federal law does not require a landlord to accept an applicant’s copy and tenants have been known to fake their credit report before presenting it to the landlord.

Step 3 Review the Tenant Screening Report

Review the reports.  Just because someone was arrested or has a history of moving violations does not mean they won’t pay the rent on time or act irresponsibly in your property.  However, sexual misconducts or certain types of criminal offenses are a cause of concern.

Step 4 Approval or Rejection

Approve or reject the applicant. A property manager or homeowner association may reject a prospective tenant based on a fair Tenant Screening process which has been required by all the applicants.

Step 5 Adverse Action Notice

If a prospective tenant is rejected because they did not meet the selection criteria, they need to be provided with a Notice of Adverse Action.  The CRA can provide the proper notice which includes the right for the applicant to obtain a free copy of the Tenant Screening report used to make the decision.

No Set Up Fees, No Contracts, No Monthly Minimums!

Cliff Lamm

Cliff Lamm

Cliff is the Founder of Applycheck.He has worked in real estate as a licensed broker, builder and investor. He shares his passion for real estate and technology with every client.
Cliff Lamm

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2017-09-08T10:25:06+00:00