Reading a Credit Report
Spend some time analyzing your applicant’s credit report. You are not just looking at the credit score. While a 700 plus credit score is great to have, it’s not always necessary. Look at the details of the credit report. If they have a bankruptcy, foreclosure or short sale in the past but they have been good since then, you may be able to work with them. You don’t want to see late utility payments and car payments or delinquent rents and judgments from other landlords. While a high credit score is great, as long as there are no recent collections on a tenant’s credit report, they will probably be okay.
The tenant’s present financial status is also an important part of screening. Verify income. You’re looking for a tenant who earns at least three times the monthly rent in verifiable income. Ask to see pay stubs and bank statements. Look for reserve funds on the bank statements. You want a stable tenant who can afford to go through some adversity. If they have a stable job and some savings, you know they are in good shape financially.
This is the most important part of your screening process. Check with current and previous landlord references. If they are consistent, you know that you have a good applicant or you don’t. If the current landlord says the tenants are great but previous landlords say they were problematic tenants, you know that the current landlord has the incentive to be less than completely honest.
These tip are just the start of the screening process. If you’d like to hear more, please contact us at Titan Property Management.