A background check for tenants is one of the most powerful tools you have at your disposal to ensure that a tenant is a good citizen who meets his or her responsibilities on time and will treat your property with the respect and care it deserves. Every property management company in Fairfield conducts them because they reduce unpaid rent, turnover rates, eviction rates and more.
What Is a Background Check for Renters?
A background investigation is the process of accessing public and privileged records concerning finances, employment, residences, criminal behavior and so forth. Since past behavior is a predictor of future behavior, a background check for tenants is an effective way of avoiding problems. A property management company in Fairfield would rather invest now then pay eviction costs later.
Do-It-Yourself Screening vs. a Professional Background Check
If you currently use property management services, then that company will handle the screening for you. If you handle it yourself, be aware that this can be a time-consuming process, and you’ll likely have to rely on a professional service for at least some parts, such as the criminal check and credit report. There are also companies that will handle all or at least most aspects, finish the screening in a timely manner and provide you with an in-depth, computer-generated report as well as recommendations.
How to Conduct a Background Check
Your launching point for a background screen is a tenant application. This is why formal applications are so important, and why most property managers in Fairfield require them. How the prospective tenant fills out the form is the first chance for a red flag. The form also gives you the chance to ask for a social security number and the right to perform a credit check in a non-confrontational manner. The Fair Credit Reporting Act requires you to receive permission, but if you ask and are denied, the law allows you to reject tenancy based on that refusal. You can also integrate other helpful information, such as past residences and landlords, a Facebook page, personal references and so forth.
Background Check: Criminal Record
The criminal record is among the main reasons landlords perform background screening. No one is perfect, but you want to ensure that a tenant isn’t prone to violence or other dangerous behavior. You’ll need to use a screening service for this part at least. Use a company that compiles records at a county level and throughout the U.S. Also, ensure that the service accounts for charges that are currently open or have been dismissed. Context and the time since the charge often matters, but someone with domestic abuse charges is prone to violence and someone with multiple DUIs is prone to bad decisions.
Background Check: Income Verification
Income verification is an essential aspect of a background check because you need to ensure that the tenant can afford the unit. The industry rule of thumb is that a tenant should make 3.5 times the monthly rent. Therefore, if you charge $800 a month, then you should seek a tenant that makes at least $700 a week. If you fail to do that, then you set yourself up for late payments and non-payment. Request a paycheck stub or other proof, and be sure to verify it with the employer.
Background Check: Credit History
When conducting a background check for tenants, a credit history provides insight into how a person lead his or her life. There have been numerous studies linking bad credit to bad decision-making in other areas in life. That doesn’t mean a person who went bankrupt because they were devastated by medical bills is a bad bet, but the person who has negative credit history over the last five years or can’t get credit may be. They’re either a financial risk-taker or someone with a sense of entitlement.
Background Check: Past Residences
Especially in light of modern privacy laws, investigating landlord references may seem useless, but property management companies still conduct them. At the very least, they can serve as any early filter to identify people who lie or move around a lot for non-work-related reasons. Be mindful that a credit check will also provide you with all of the residences associated with a person. Therefore, you don’t just have to rely on the information provided by the prospective tenant, and you can use it for comparison.
Background Check: Personal References
The screening process is also an opportunity to investigate personal references, and property managers in Fairfield will often recommend requesting at least three. Don’t underestimate the importance of personal references. Many landlords disregard them because prospective tenants will always put their best foot forward or list people who’ll lie for them. While this is surely true, do you really want a tenant who doesn’t possess the prudence to take those steps. Therein lies the value.
Background Check: An Internet Search
Another intriguing tool that you have at your disposal when performing a background check for tenants is the Internet. This approach is somewhat of a hot topic since employers are using it and not everyone agrees with the method. Nevertheless, through social media platforms like Facebook and Twitter, people leave behind digital footprints that you can use to your advantage. How someone chooses to present themselves online can be very telling, and while we’re not recommending holding a dumb post made at a young age against them, what you find here may be the red flag you need to move on.