Frequently Asked Questions
What is tenant screening?
Tenant screening or resident screening is the general term used to describe the process of obtaining relevant credit and public record information by landlords and property owners in order to better evaluate a prospective tenant. The applicant’s personal information is collected on the rental application, along with an authorization allowing the landlord to use this information in evaluating the applicant pursuant to the rental application.
Why is it important?
Managing a rental property involves a commitment to property maintenance, record keeping, and above all, selection of the best possible tenant for the property. Selecting the best tenant protects your investment. Good tenants not only pay the rent on time, but are the onsite stewards for your property. If you select the wrong tenant, you run the risk of loss of income from unpaid rent, possible property damage or liability for the actions of your ill-advised choice of renters.
What are Fair Housing Laws?
Fair Housing Laws are in place to prevent discrimination in housing transactions, including sale, rental or financing of property. The Fair Housing Act prohibits discrimination based on race, color, national origin, religion, sex, familial status and disability. Should you violate these laws as a landlord, whether intentionally or accidentally, you may be sued in Federal Court and ordered to pay actual and punitive damages as well as attorney’s fees and costs.
How do I choose the best resident screening company?
The best tenant screening companies are nationwide in scope and offer an experienced staff capable of answering questions and recommending background report options. The availability of obtaining a “scored” report, such as National Tenant Network’s NTN DecisionPoint®, will simplify the leasing process.
NTN DecisionPoint reviews an applicant’s background and produces an overall score, much like a credit score, along with a corresponding rental recommendation – both of which are based on a thorough and objective analysis of the applicant’s credit record and his or her history of eviction(s) and/or lease violation(s). NTN DecisionPoint also takes into account longevity of employment and longevity of residence, thereby ensuring a higher probability of overall resident retention. In addition, the NTN DecisionPoint report is accompanied by a comprehensive NTN tenant-performance profile, a detailed eviction and lease violation history, screening history, landlord identification and terrorist search.
How do I obtain an applicant’s credit report?
Tenant screening companies, such as NTN, are strictly regulated under the terms of the Fair Credit Reporting Act. Anyone requesting consumer credit information about an applicant must show “permissible purpose” before receiving the information. There are three national credit bureaus providing this information: Equifax, Experian and TransUnion.
What additional information should I request?
In additional to consumer credit information, tenant screening reports may also include criminal records, eviction records, sex offender registry searches, Patriot Act or Terrorist (OFAC) searches and rental or employment verifications.
How does comprehensive applicant screening impact investor profit?
Investment losses can occur from evictions, “skips” (tenants who leave without notice or without paying the last month’s rent) or property damage done by tenants. While these are examples of the most common lease violations, they are not the only ones that might cost real estate investors money. It is especially important to be aware of past performance when choosing a tenant for your property. Good credit doesn’t necessarily equate to good tenants.
Tenant screening is quick and cost effective. It should always be an integral part of your investment property management strategy. Minimizing risk requires that you:
- Establish consistent criteria for all rental property applicants
- Comply with all federal and state laws regarding Fair Housing and Credit reporting
- Obtain the data necessary to make an informed decision
- Screen every applicant