Credit Checks And What To Look For When Screening Potential Tenants

When you’re trying to fill your property vacancies on your own, finding new tenants can almost become a full-time job. Credit and background checks are a good place to start, but in order to choose the best, most reliable and trustworthy tenants, you should be looking for certain things that can mean problems for you down the line. Making the best choice the first time is a perfect goal to aspire to, and the best way to find the best tenants for your properties is to pore over background checks and credit checks with a fine-toothed comb, weeding out the applicants who might cause you headaches later on.

What to Know Before the Background and Credit Checks

Ask most any landlord or property manager how they find the best tenants for vacant properties, and you’ll likely hear that they start the tenant screening process the first time they make contact with an interested applicant. By asking potential tenants a few key questions, owners and landlords in Chicago can get a better feel of what they might be getting into if they rent to that a person. For example, if you ask someone looking at your property when they need to move in, and they say in just a few days, it can be an indication that this tenant hasn’t planned ahead enough (will rent be late, too?). However, if the person answers that they don’t need a new place for four months, you can count on them not being ready to commit to signing a lease, simply because they have a lot of time to look at plenty of properties and won’t feel any time crunch. Both of these situations can cause potential snags in your rental process. As a property owner, you should ask potential tenants a few questions to get a feel for what kind of renters they’d be, such as:

  • Income What their monthly income is, and whether they can show proof of it. If they’re reluctant to provide proof of income, they may not be telling the truth about the amount of rent they can cover every month.
  • References If you can, get a reference or two from former landlords. Current landlord references can help in a pinch, but if the tenant is bad, that landlord might say just about anything to get rid of them. Instead, check with former landlords, who have no reason to lie about a tenant who regularly hosted loud parties late into the night, left cigarette burns on the hardwood floors, and smashed holes into the walls before moving out (some of those “worst tenant ever” stories will give you nightmares!)
  • Motivation Why they’re moving. This sounds pretty basic and perhaps a bit personal of a question, but while most tenants will say that they need more space or want a change of scenery, some will mention problems with their landlord or an eviction. These are obvious problems you’ll want to avoid.

 

Conducting Background Checks and Credit Checks in Chicago

Nowadays, potential tenants are used to being asked to submit to a credit and background check as part of the approval for a new rental. If an applicant resists this step, it could be because they are hiding something—felonies, evictions, collections, or a host of other issues—and you may want to reconsider the offer.

Once you’ve run the background check and credit check, there are a number of things to look into when deciding which applicants will be the best tenants for your apartments or condos in Chicago.

Evictions

Obviously, if you see that a tenant has been evicted from properties before, you may want to do some investigating. These may not always mean that the prospective tenant should be disqualified—ask the tenant and previous landlord the details, and make an informed decision from there. One instance of a wrongful eviction might be something like a landlord refusing to make repairs, and evicting the tenant in retaliation. Illegal? Absolutely! That’s why it might be in your best interest to work with applicants on a case-by-case basis if an eviction is the only red flag on their background or credit check.

Public Records/Lawsuits

Another thing you’ll want to look out for is whether your applicant has ever been sued for things like unpaid rent or unpaid child support. These can be a pretty clear sign that the applicant has trouble paying for things on time. Do you want to roll the dice and cross your fingers that you won’t be the next person chasing down payment? Probably not, especially when you can likely find other renters in Chicago who are better suited for your property.Make sure that the applicant’s credit score is healthy, too—multiple collections and a high debt-to-income/limit ratio can mean a tenant has problems managing money.

Run-Ins With the Law

If your applicant has some minor things on their record, you may not need to worry about them being an unsuitable tenant—plenty of people did stupid things when they were young that they now regret as responsible adults, and these infractions may not be grounds enough to discount them from your applicant pool. However, some criminal charges could mean putting yourself and your other tenants at risk. Use your best judgement in these cases, or confer with your property management company for a second opinion. Felonies can indicate a disregard for following the rules (obviously), and renting to these applicants can mean allowing someone that is potentially dangerous into your property—seriously, those “worst tenant ever” stories are no joke. Don’t let your property make a Buzzfeed list for the wrong reasons.

Need Help With Tenant Screenings?

Screening applicants doesn’t have to be your full-time job. Property management companies can be a great asset when you want to spend your time as a landlord or property owner doing something different. Here at Lofty, we know that your time is your most valuable commodity and we’ll help you manage anything you need. Give us a call today and find out how we can help you enjoy owning your properties even more than you already do, and start living the life you deserve.

Speak with one of our experts to find out how we can supercharge your investment.

 

 

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