When do you request credit/background check?

Question

When applicants are applying do you require they complete the application first and after you review and wish to proceed, you then request approval to request the credit/background/criminal check?  Or do you have the applicant apply and request the credit/background checks at the same time?

I ask because I'm trying to decide between using two different credit check companies. One charges $42 for all checks but has everything "in house" (ability to post online listings on social media sites, craigslist, etc. with an 'Apply Now' button, send e-application, screen request, digital lease, create and send additional documents (add'tl $15), collect rent). The other charges $35 for the checks, but would require doing all those things separately.

It's not a big deal to send the applicant the credit check authorization email separately. But if it's better to have the applicant apply and authorize the check at the same time then why not?  I was just wondering about dealing with refunding if someone applied who didn't qualify (not having 3X rent or something).

Nicole A. · Answer

@Arthur Banks I will run the background/credit check after I have received a completed application and done my own free checks first. Paying for a check is the last step.

Applications need to include a copy of their license/ID, SS card, and proof of income (paystubs and such). That right there should prove fairly well their income; I don't need to pay a service to see that.

I do a search of their names online. Maryland provides a case search function on one of it's .gov websites. It will show any court activity by a person in Maryland. This is also free. Check to see if your state/county has this online. (I know this only covers that particular state; use personal judgement)

Then, I do an online search of their current (and previous) addresses to see if the landlord name they put on the app matches the records. It is possible it doesn't match if they use a property manager. Ask if they have a PM or work directly with landlord/owner. This is free and tells me if they've lied on the app.

Then I call references, employer, and past landlords.

Sometimes, this free research is enough for me to determine my decision. If I'm still on the fence, I'll pay for the background/credit search. For me, I just want to see that their income supports the rent, no trouble paying bills in general, and not a big troublemaker.

If someone does not make the cut, you are not required to refund them. You still spent the money, time, and effort; keep the fee. Perhaps there are states/counties that require you refund someone who doesn't qualify, but I haven't heard of it.

Have an application with plenty of questions. I'm happy to share mine. PM if interested.

Arthur Banks · Answer

Thanks @Dawn Brenengen I sent a message to you as well.

Thanks all.

Dawn Brenengen · Answer

@Arthur Banks I would go with the one stop shopping company for credit checks. I use a company that allows the tenant to apply online, and they pay the $50 app fee at the end of completing their app through the site with a credit or debit card. They run the credit, criminal background, verify employment and get a rental reference.  They have the applicant upload their drivers licenses and pay stubs into the system. I can access all of this info, but I don't have to lift a finger to actually do any of the screening. It's one more step in my quest to automate my business as much as possible.  I highly recommend it!

Arthur Banks · Answer

@Ryan R.

I did in my original post but the message got removed.  I'm not sure if that's why (I revised the original). So I'll PM you.

Andrea Shields · Answer

I need to jump into this conversation as well. I currently use a realtor to find my tenants, screen and complete the credit checks and I pretty much take over from there. I realize that I can do the job myself after speaking with friends of mine that are also in the real estate investment business. This would save me $350 per applicant. @Dawn Brenengen can you please share that screening company information. Thanks

Richelle T. · Answer

@Dawn Brenengen

Your method of screening sounds like exactly what I'm looking for. I will PM you.

Dawn Brenengen · Answer

I should add - in my area, I see app fees ranging from 30-75/person, so at $50, I'm pretty mid-range. I contemplated raising them since many others charge more, but I haven't yet.

Troy Owen · Answer

I know people who charge $20 and even $50 application fees.  The $50 app fee is the exception not the norm. That is in a high demand/high rent area.  A $20 application fee is more realistic if it includes their credit check.

Arthur Banks · Answer

@Troy Owen Thanks. I didn't even think about the application fee. We are allowed to charge a fee in IL. I know this from being a tenant myself in the past. How much are you allowed to charge in WI? I'm currently looking for property in Kenosha, Racine and MKE.

Troy Owen · Answer

Arthur, I'm not sure about Illinois but some states allow a non-refundable application fee.  It pays you for your time and also helps to weed out anyone who isn't serious.  As far as the credit checks, I use a service by one of the big 3 credit reporting agencies (message me if you want the link). The down side is that it doesn't give you a full report but you get a score and it tells you the positive and negative issues affecting their score.  What I really like is the applicant pays for the credit check.  You send them a request to view their credit score and they pay approx. $17.  I've had people in the past that never respond to the request for a credit check .  If they don't respond you have your answer.

-Troy

When do you request credit/background check?

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