Tenant Screening in a Bad Economy

Many will say that in a bad economy a landlord has to be prepared to rent to less than ideal candidates because (1) a rent paying tenant is needed asap to avoid paying the monthly mortgage out of pocket (2) because of the economy, many individuals are facing hard times—this will show in their tenant screening results. So, the time crunch and shaky economy will inevitably lead to mediocre tenants. Well….yes…..and no. Tenant screening is more difficult in this bad economy but it must still be done thoroughly and we have to know what to look for. While one cannot completely eliminate risk, a lot can be done to reduce it—the first step is to know how to do a tenant screening in a bad economy.

Unfortunately, we see a trend where landlords will do a basic tenant screening and then feel good about approving a tenant. This is so, even if there are blazing red warning signs all over the results of the tenant screening indicating that the applicant should be declined! Its like screenings are done merely for peace of mind and not as a way to actually analyze the results to make an informed decision. This trend could prove to be a very costly and headache inducing trap.

With Tenant Screening credit reports, learn to see the patterns. More applicants than ever have a foreclosure or a bankruptcy on their credit record and landlords have to decide whether to overlook it. This is quite understandable since we are all acutely aware of the economic crisis across the country. The idea here is not to automatically reject every applicant who has had a foreclosure, bankruptcy or late payments. The key is to look for the pattern. A credit report will usually contain information dating back up to 7 years.

When looking at the report, you want to look at it as a whole. If you see that for many years an applicant had consistently good credit, timely payments, low balances etc….then suddenly in recent times there is some late payments, foreclosure, etc…..well maybe we can chalk that up to the tough times and decide to do further research before finalizing a decision. BUT, if you see a tenant screening report where the entire ten years of history is full of bad debts, late payments, collections, etc…well this indicates that (1) the bad credit is not due to the economy (2) this person had practically made a career out of having bad credit. In this case….RUN! because their bad credit has more do to with them personally than with the economy.

If you have any questions e-mail us at info@credasys.com or call 714.828.5769