Tricks of the trade of resident screening.

In today's market, what does proper resident screening entail? Reviewing the application, credit report and driver's license was once thought to be enough, but is it really?

"I checked out his credit, his application, called for employment verification, and saw his driver's license - it all checks out!" You should be able to sign the lease today, right? Wrong. Although, every step you took was correct, you missed some of the most valuable information about this applicant. He is a current lease holder down the street and hasn't paid rent for the past six months. In fact, he has left owing money or was evicted from the last 3 places he has lived! He was fired from his job last week and to top it all off is currently wanted in Virginia for armed robbery! How could you have known?

There are some "tricks to the trade" that are very valuable today in resident screening. Keeping yourself informed and on top of the latest technology and information available to you is your first step to reducing rental risk. The information is available to you through companies that specialize in collecting and computerizing landlord-tenant public record information.

One such firm, The Registry, provides their customers with court and credit information through computerized access to landlord/tenant court records, and credit reports; tenancy information from a network of property managers, wanted fugitive scanning, and criminal information in some states as part of their product offering.

Scenario 1: "I didn't know he had a history of evictions!"

A credit report offers a clear picture of how an applicant treats financial obligations. Rental payment histories tell you how your applicant has treated previous lease obligations. Effective rental payment history reports should include landlord/tenant court records, the number one indicator of whether or not the applicant will pay the rent.

As in the example of the delinquent applicant above, this man didn't pay rent at his last three residences. The rental history report will allow you to see all current and previous addresses and landlord/tenant filings associated with that applicant's name and social security number. Although the credit report does provide you with previous addresses, you need to be aware of the facts about this information. Credit bureaus provide customers with those addresses that creditors report to them. These addresses originate, of course, with the applicant. The point is two-sided. Application fraud can begin when applying for credit or residence. Addresses reported to the credit bureaus via member inquiry are not necessarily going to match the addresses on the rental application. If the address on the rental application does not appear on the credit report, it is not necessarily fraudulent. This address just may have never been used when the person applied for credit. This is why rental history reports are so important. Credit reports only list the three latest reported addresses. Rental history reports provide you with information such as any evictions, failure to pay rent cases, unlawful detainers, writs, judgment, etc., at any address associated with the name, social security number and date of birth for the past 7 years. Therefore, you are provided with a complete listing of the applicants rental history.

Some rental history reports provide tenancy information reported directly from a network of property management companies. With this service, managers gain a direct link to tenancy information from fellow property management companies. By sharing information between communities, this service bridges the gap between the time when the tenant skips and the information showing up as a public record. The ability to report information regarding skips, evictions, etc. instantly to be shared with other property managers is essential. This will eliminate the chance of a recent lease violator establishing tenancy at another unknowing property prior to court and credit information being processed and recorded. When a delinquent tenant skips, inform your fellow property managers instantly through a company that provides a network of tenancy files. This type of supplement to court and credit information will not only protect you, but assist in collections as well. Don't let them take advantage of this small window of opportunity! It is easy to see the value of becoming part of such a network.

Another trick that can save you time is to pay attention to the prior inquiries on the credit report. If other property management companies or apartment communities are listed, it may be wise to call them. If the inquiry was recent, they probably just denied this applicant and that's why he's still apply for housing. Sharing information between communities is very important when it comes to tenant screening. You may find that the applicant was denied because he was recently evicted from his last place of residence - you're one step ahead. To meet with Fair Housing regulations you still have to do a consistent background check you cannot base your entire decision on your discussion with the other rental community. There will be those times when you call another community about an applicant and they are still of the philosophy that passing this delinquency onto someone else is better than keeping that tenant. Do a background check! Remember, proper and consistent record-keeping is paramount in meeting Fair Housing laws and protecting yourself in any discrimination suits.

Scenario 2: Fraudulent Social Security Numbers

There are times when the applicant will submit a fraudulent social security number and/or date-of-birth. Re-verify the social security number with the applicant to make sure that you have the correct one. Sometimes it is a simple human error, like transposed digits; other times, a wrong social security number is a deliberate attempt to mask a bad credit or rental history. There are services available through the credit bureaus to run a social search to match from their database of social security numbers any names and dates-of-birth associated with that social. It may at times seem like you've changed your line of world and become a detective, but have fun with it, - it will save you time and money in the long run.

Scenario 3: Inefficient Employment Verification

When verifying employment, be sure to look up the number in the yellow pages or a business directory. This is to make sure that the phone number and address is of a legitimate business. Applicants with something to hide have been known to give a friend's number as their place of employment and then have the friend wait by the phone and act as the employer. When validating employment, it is important to always speak with one of the following: personnel manager, someone in charge of payroll, controller, or financial officer whenever possible. If the company is small and does not have any of these departments, ask your applicant for their most recent pay stubs (only take originals) to confirm employment. Employees who are tipped (waitress, cab drivers, etc.) should also present W-2 forms and tax returns. Verify the applicants social security number and income with the employer. If they refuse to verify income over the phone, it is a good idea to ask the applicant to provide you with original pay stubs for the last consecutive 4-8 weeks, along with 2 years of tax returns. If there is more than one income on the application - as with married couples - then both incomes must be verified.

Scenario 4: Renting to Wanted Fugitives

To protect yourself from renting to fugitives fleeing from the law, some court and credit information services offer scanning for wanted fugitives. A service such as this will alert local officials to pick up the fugitive and keep your community safe from housing potentially dangerous criminals. The consequences of renting to someone wanted for murder, rape, arson, kidnapping, etc., are far too great a liability for your property to bear when such services are available to you.

Although tenant screening is an intricate process, information technology has made the best and most effective information more accessible to property managers. Thus, time and guesswork have been eliminated from resident screening. Proper screening using rental histories, credit reports, and wanted fugitive scans will protect your property from making costly rental decisions. Keeping yourself up-to-date on issues concerning proper tenant screening and the information technology that is available to you can lead you in the right direction to minimizing rental risk. (The Registry is a tenant screening agency offering comprehensive court and credit information to landlords and property managers nationwide. The Registry's database allows members access to 18 million land-lord-tenant court records from nearly 300 courthouses across the country. For more information carl [phone].)