Credit reports are an indispensable tool for agents and property managers because they help you filter out the most qualified renters. Following your gut about an applicant isn’t reliable, and it could get you in trouble under Fair Housing laws. Looking at credit and background checks gives you documentation and grounds for either accepting or rejecting a renter. If you aren’t utilizing credit reports to help you select new tenants, here are some reasons why you should start.
It’s important to lease to responsible tenants
Looking at a credit report tells you if a renter is financially responsible — a big deal if you plan on receiving rent payments on time. If they have outstanding debt or financial burdens, you’ll have an immediate red flag. Use a credit report like a report card: Use the records to make a positive or negative judgment on a person’s ability to pay monthly rent.
Avoid being the victim of a scam
Researching a renter’s background and financial history allows you to confirm the tenant’s identity. Renting out your unit without a lead qualification process opens yourself up to being the victim of renter fraud. Confirm a renter’s identity and employment, and speak with previous landlords to confirm rental history.
Maximize your time
Unqualified tenants aren’t worth your time or effort. Don’t make filling vacancies a rushed process. By requiring each applicant to submit a credit report, you’ll save yourself time in the long run by being able to eliminate problem tenants early in the leasing process, which is way better than finding out the hard way a few months into the lease. Taking the time to find the “perfect” tenants is a good investment because they’ll make paying rent on time a priority and take care of your property.
Judge all tenants fairly
Violating Fair Housing laws can get you into big trouble. A good way to minimize the risks of this happening is to judge all your applicants using the same method — by analyzing their credit reports and performing background checks. Select tenants on their ability to pay rent on time and take care of your property.
Leasing out your property is similar to getting into a long-term relationship — trust is the key to ensuring that both you and the tenant have a good rental experience. Knowing that a renter is financially secure and has a clean background gives you a solid ground upon which to build a sound landlord-tenant relationship.
- How to Find the ‘Perfect’ Tenant
- Understanding Fair Housing Laws
- 5 Things Landlords Can Do to Attract Renters