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A landlord’s guide to rental applications.
As a landlord, one of your biggest — and most important — challenges is finding the right tenant to occupy your property. But how do you know a good tenant from a bad one? That’s where a proper screening process comes into play. Requiring candidates to fill out a rental application gives you the opportunity to perform a background check, learn about their credit history and call references to learn more about their past as a renter. You can use this information to determine their suitability as a tenant.
So what should you include on your rental application to legally and properly gather this information? Let’s take a look.
What Information Should Go on a Rental Application?
The purpose of a rental application is to give you a look at the reliability of the candidate. The information collected will help you get a better understanding of who may be living in your rental unit. Will they be able to pay rent? Do they have a good reputation with previous landlords? Have they ever been evicted?
To answer these questions, start by gathering basic information, including:
- First and last name
- Phone number
- Date of birth
- Social Security number
- Email address
- Name of dependents
- Dependents' date of birth
- All pets
For co-applicants, have a section for:
- Co-applicant first and last name
- Date of birth
- Social Security number
Find out a candidate’s residential history, including current residence and previous addresses (at least within three years). For current address, include:
- Current address
- Apartment number
- Zip code
- Phone number
For previous address, include:
- Previous address
- Rent amount
- Phone number
Have your applicant describe their credit history by asking the following questions:
- Have you declared bankruptcy in the past seven years?
- Have you ever been evicted from a rental residence?
- Have you had two or more late rental payments in the past year?
- Have you ever willfully or intentionally refused to pay rent when due?
To learn more about the applicant’s reliability to pay rent, gather their employment and salary information such as:
- Employment status (full time, part time, student or unemployed)
- Dates employed
- Job title
- Supervisor name
- Supervisor phone
- Salary/hourly wage
- Other sources of income
Requiring references gives you the opportunity to learn more about the applicant. Ask for:
- Banking accounts: name on account, type of account and account number
- Personal reference: name, phone and relationship
- Driver’s license: driver’s license number and state issued
- Vehicle information: make/model, year and license plate state
Include a section for additional information. This way the tenant can provide details that might help you better evaluate their application. Include a question that asks for a phone number where they can be reached to discuss the application.
Why Do Landlords Ask for Bank Account Information?
As a landlord, you can request information that helps verify a potential tenant’s ability to pay rent. While you won’t actually be viewing what’s in their accounts, by asking for a candidate’s banking information, you can confirm that they hold an account and have money saved. It’s also a security net for you in the event your tenant defaults on the rent. Hopefully it doesn’t come to this, but if you have to sue for lease violations, you can seek a court order that allows you to garnish your tenant’s bank account.
Why Run a Credit Report?
Requiring a credit check during the application process gives you insight into the financial history of the applicant — and you can use this information to determine their reliability as a tenant.
A credit report will tell you if they have or had credit issues. Here are a few ways you can use a credit check when screening tenants:
Late payments. You need a tenant to pay rent on time. You might have a mortgage on your rental property, which means a late payment by a tenant could mean a late payment to your lender. A credit report can demonstrate an applicant’s history of managing their credit, including if they consistently make late payments or if they are typically on time. With this information, you can determine if they have responsible behavior or not.
Financial stability. A credit report also shows you how much debt your prospect has. You can use this information and compare it to the income they reported to get a better idea if they can afford to rent your property.
Validate information on their application. The credit report will show prior residences, evictions, bankruptcies and other public records, so you can confirm that the information they provided on the application is accurate.
Remember that in order to run a credit check on your tenant, you’ll need to obtain their written permission. Usually their signature on the rental application counts as written permission if you ask to run the check. If an applicant refuses to allow you to run a credit check, chances are they know their credit isn’t good or they have something to hide. Your best bet is to disqualify anyone who refuses to the credit check.
Why a Landlord Should Require a Background Check
A credit check is important because you can view a prospect’s financial history and determine if they have money to pay rent. But what about the tenant as a person? Renting to a reliable, low-risk tenant is just as important.
Did you know that as a landlord you’re responsible for illegal activity, disturbances and violence caused by your tenant? By performing a background check, you can find out if the prospect has any convictions or other history that you’re not comfortable with. Knowing they’re criminal history protects you from liability, helps keep your other tenants and neighbors safe and reduces tenant turnover, since you’re likely to attract higher-quality tenants with a rigorous screening process.
It can be time consuming, complicated and expensive to check a prospect’s background. That’s why American Family Insurance has partnered with TransUnion’s SmartMove to streamline the process. SmartMove is a web-based solution that gives you access to the same tenant screening tools used by the largest property management group. It provides a comprehensive credit and criminal background check and custom leasing recommendations to help independent landlords make an informed decision. All you need to get started is the tenant’s email address. The applicant completes a short online form and gives consent to be screened. The screening is then completed in minutes.
Protect Your Investment With Landlord Insurance
Pairing a careful vetting prospect with the right landlord insurance gives you peace of mind that you’re taking steps to protect your investment. Find out more about landlord insurance with American Family Insurance and connect with an agent to get the customized coverage your business deserves.
This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal advice. You should contact an attorney for legal advice specific to your situation.