What do you use to pre-screen your tenants?

Question

I need to pre-screen applicants to see if they would make a good tenant for a lease option. I need to pre-qualify applicants to see if they could make a good tenant AND get approved for lending before the end of the lease. Would a standard credit report and background check give me the information I need to determine how likely they are to get approved for lending (DTI)? Or would I need something more?

Of course, there is still a lot that I need to learn, but a good answer will give me a better understanding of what I should request from my applicants. I appreciate any and all help.

Daniel Walker · Answer

We tell potential tenants that we do not rent to felons, sex offenders, or with any sort of drug or assault arrest even if there is no conviction. We ask the potential tenant to pay for the criminal background check which we will apply to their first month's rent if they are accepted. if they don't agree then we have an idea about their background and don't rent to them. We do not do credit research through any credit agency. We talk to any landlord that they have had for the last three years and ask to see two pay stubs and we verify employment. This strategy has served us very well.

Laticia Braxton · Answer

If you are talking about a one-time occurrence, the easiest thing for you to do is have a mortgage professional run a pre-qualification check on them and possibly pull a full credit application to see if they are able to buy.  The lender's credit check should give you all of the information you need for a rental check.  There are also credit/background check services out there that charge per report instead of having to sign a contract and pay a monthly fee.

If you are doing this on a regular basis, you will need to follow Nita's advice and pay for a software system and I hear Buildium is really good.  To check for the tenant's ability to purchase, you should partner with a lender who will run the checks for you. They would then build a relationship with the tenant, so that if/when the tenant can buy, they use that lender for the sale (there are no guarantees of course). They would be a free leads for the mortgage professional so they should be willing to partner with you.

I hope this helps and best of luck to you!

Nita Taylor · Answer

Hey Brandon. I use Buildium, which is an online property management software. Its about $45/month. There is a built in system on there for credit & background checks. Very helpful, easy to use system & reasonable priced.

Brandon Stewart · Answer

Account Closed I'll rephrase the question. From what I understand there are two kinds of credit reports. Hard inquiry and Soft Inquiry. I'd like to use a soft inquiry when screening tenants because it doesn't damage their credit. I just need to know that a soft inquiry will show me any bills that would normally appear on a credit report, and the minimum payment for each. So if the applicant has 2 credit cards and an auto loan, I need to know how much she is expected to pay on those every month. So really I am just seeking confirmation that this information is included in a soft inquiry.

Brandon Stewart · Answer

Account Closed Both. I am pre screening for a tenant who pass your typical tenant pre screening, and can qualify for a mortgage within the lease term.

Account Closed · Answer

There is no benefit to you to run a soft inquiry.  The only way to get one, is to have them run their own and give you a copy - which you can't verify as being real.  Always run your own.  If they balk, then they probably know it won't be approved.

Inquiries for rentals don't normally send up lots of red flags.

I'd occasionally get an applicant who wanted me to use a report they'd run themselves.  What I'd tell them is that I would be willing to look at it to give them an initial decision as to whether or not the credit report they give me would be a deal breaker - but, I'd also tell them that if it's not, then I'll be doing my own credit search through our company, and would still be checking all other references and running all other reports like eviction, criminal, etc.

You could offer that as an alternative - but be sure to tell them in order to rent to them, you'll be running all checks through your company, which will be a hard hit.

They'll probably screen themselves out at that point, anyway.

If you're trying to figure out how to run someone's credit report without their knowledge, then as I understand it, that's against the law, and therefore, a really bad idea.

Account Closed · Answer

Still confused. What's your agenda?  What are you trying to accomplish?  Pre-screening tenants is different than pre-screening buyers.  You're being too vague about what you're trying to do.

Account Closed · Answer

I'm confused.  Are you talking about tenants or buyers?

What do you use to pre-screen your tenants?

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