Applicants: When to ask for bank accounts statements?

Question

When should a landlord require to see bank statements of the applicants to see their financial stability?

I was recently advised that is common practice in the industry NOT to ask for personal bank accounts UNLESS the applicant has a low credit score. This in order to help the applicant while the landlord see if the person can meet their financial obligations.

I wonder if this is common practice, how can landlords avoid some risk? For example, what if the applicant has a good credit and a job but a low bank balance, and then, all of the sudden the tenant losses his/her job?

Dave M. · Answer

Steve - that's a good point. I had to supply a copy of a bank statement recently and it seemed like it took me an hour just to figure out where to go on my bank's website to find a PDF.

Steve Babiak · Answer

Below I will give some situations where the bank account statements are needed.  Otherwise, not needed.

These basically all go toward proving documented income BTW.

Child support recipient - need award letter of amount and recent proof of payment - just because there is an award does not mean the ex (or other parent) is paying.  So the bank statement would be used in the event that the child support is paid via direct deposit (my county does that with court handled child support).

Alimony - similar to child support situation.  Award letter and proof of payments needed.  Bank statement useful to show deposits.

Disability - again, need award letter and proof of ongoing payment.  Bank statement useful to show deposits.

Pension and Social Security - should be award letter and proof of payment.  Bank statement useful to show deposits.

By now, you should have a better idea of when a bank statement is useful.

Now, there is one more thing to consider - people are now going paperless on bank statements.  So you have to be prepared to look at these in some novel ways.  For example, I was shown proof of child support payment by an applicant by them using their smart cell phone to bring up their online banking statement.

Ned Carey · Answer

Wow, you have tenants that actually have bank accounts?  :-)

Jeff S. · Answer

Charley Fernandez for my money credit is the best way to minimize risk. Have had very good experience when people have good credit.

Charley F. · Answer

Jeff  S. Hi. I should have said "minimize" instead of "avoid some", much clearer. I do understand risk is part of the business, I am particularly interested in minimize them as much as possible.

Rob K Dave Ramsey seems to be a famous guy around here :)

James H. · Answer

If I have to get that creative to approve an applicant...I don't approve them.

Scott W. · Answer

this summer, i had an engaged young couple come to me. their income wasn't the most  but i put on my application how much in checking & savings. $4k & $12k & they had $3k in their previous security deposit. i was shocked!

the gal, a hairdresser, was cutting my hair 1 day. she told me they do cash in the envelopes for food, rent, savings, etc. said her dad raised her that way.

I thought, "these people should meet dave ramsey!"

Rob K. · Answer

Dave Ramsey claims that 70% of Americans live from paycheck to paycheck. I would imagine that tenants would be closer to 90% or higher.

Larry K. · Answer

I echo what Jeff  S. said.  Credit check, pay stubs, background check, 1 1/2 months security.

My tenants did not have good credit but that is why they are renting and not buying.  This could also lead to them being long term tenants.  So far they are working out fine.

Jeff S. · Answer

Charley, it is hard to eliminate risk. Part of the reason many tenants are tenants is because they have low bank balances. Your tenants will reflect your economic climate. If your area is poor you may have to treat them in a less sophisticated way and look at their bank records.

Have never asked for bank statements. Credit reports and criminal is enough IMO for my area.

Have had sketchy applicants offer this but turn down because sketchy.