Need to Know!

Tenant Screening 101 – “The Humble Application”

March 15, 2016 1:01 pm

Thus far in our Tenant Screening 101 series, we’ve discussed…

  • The importance of tenant screening
  • Consumer reporting law (notably the Fair Credit Reporting Act)
  • The elements of a comprehensive tenant screening report
  • The importance of accuracy
  • Screening prospective tenants on a first-come, first serve basis

Now we focus on process, which begins with the application to rent.

There is, of course, the traditional paper application – often a multi-part form ($$) – and there is the online equivalent.  The same rules (or best practices) apply.

There is a tendency to discount information found in the application – since the source is the applicant themselves.  While there is merit to that view, we are struck by the candor of most – motivated perhaps by the knowledge that falsification will result in denial or termination of tenancy – and that the obligatory background check will be both thorough and accurate.

Either way, the application is one of several sources of information that looked at individually may be found wanting – but collectively paint a very thorough picture.  The application is becoming more, not less important these days – with growing (and bipartisan) support for limits on access to (and reporting of) public records information.  Bottom line – redundancy is the key to thoroughness.

The application provides the name and addresses information – information needed to access an applicant’s credit profile, search the public record (criminal and eviction) and help confirm their identity.

Alias’ information and address history are essential to the investigative process – since a significant percentage of valid hits are the result of searching AKA’s and additional addresses (jurisdictions).  Contact information for current and previous landlords and employers is essential for rental and employment verifications.

The application is also the vehicle for making the required disclosures and securing permission to conduct the background check.  Finally, the application becomes a repository for information that is useful during and after the tenancy – regarding additional occupants, emergency contacts, vehicle and pet information, etc.

Reviewing the Application

A thorough and methodical review the application is essential.  Start by comparing the name and address on the app with that found on the applicant’s government issued photo ID.  The FCRA requires any address mismatch alerts (found on the credit report) be examined and explained – as a way to fight identity theft.  Makes sense to take care of that up front.

Go over the application line by line and field by field.  Ask the applicant to explain and correct blank and illegible fields.

Finally, state and federal consumer reporting law often disagree regarding “prohibited information” – limits on the data that can be included in a tenant screening reports – a consumer report as defined by the FCRA.  This is a rapidly evolving area of law driven largely by the disparate impact legal theory and the recently released HUD Guidelines.

Applications generally ask applicants to disclose criminal and eviction history, if any.  Consider limiting such inquiries to seven years – from the date of final disposition of criminal convictions, from the filing date of evictions.   There is little downside in terms of predictive value, and doing so reduces the likelihood of a disparate impact discrimination claim.

Visit MyScreeningReport.com and Moco Incorporated on this and related topics.

 

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