Executive Credit Management, Inc.
Your Applicant Screening and Debt Collection partners for over 20 years
1. Contact Human Resources
Applicants know they need to show you they have a job to obtain one of your apartments. They don’t actually need to HAVE a job, just show one on the application. About five percent of applicants greatly exaggerate their income and an additional 5 percent lie.
It is easy to create a fake pay stub or even fake paycheck on a computer. It is even easier to put down a friend as a boss and provide the friend’s phone number instead of the company number. Sometimes, all it requires is for the applicant to scribble something you cannot read.
When one of these applicants finds their way into your apartment you are almost guaranteed of a serious loss. It is, however, easy to remedy.
It only takes about 2 minutes to call Human resources if you have already specified you want the main number of the business on your Application. Sometimes they will want you to fax the request so they can see the applicant gave you permission but, often, they will give you the length of time the applicant has been employed and yearly salary. They will be accurate because they don’t want to get in trouble and, usually, don’t have a relationship with the applicant.
You might want to add an EMERGENCY PHONE area to your application. Ask for the direct phone number or extension, cell phone too. This comes in handy when you are checking and after a bad Tenant skips out.
You have spent 2 minutes and reduced your chances of getting a bad tenant by at least 5 percent.
2. Check Credit Report for previous addresses
First, make sure you can read the current address on the application before the applicant leaves. You can only check what you can read. Make sure this is the first address listed under previous addresses on the Credit Report. If an Applicant has something to hide, you could have an even older address on the application.
Take a quick look. About five or ten seconds should be enough time. You are checking to see how long the applicant spent in the last few addresses. If the times are short for other apartments they will probably be short for you as well.
If they are short, ask why. You might also ask permission to speak to the previous landlord. If it is not granted it is likely the applicant has something to hide.
3. FICO Score isn’t enough
The FICO score is NOT designed for Realty Management. It is designed for banks and Credit Card companies. There is a very large difference in needs. These scores are heavily weighted to reflect payments on time for credit accounts. Many people will take a late fee to postpone credit card payments but pay rent on time.
This includes debt collection accounts for Medical services which can be far too much and too many for many people to pay with any regularity. It will lower FICO scores but will not affect rent payments.
Most Tenants will pay you on time even if they are late with other bills. Scan the full Credit Report and see where the late payments occur. If there is any doubt, go to the next item.
4. Check Available Credit
In the summary section of the Credit Report are two important numbers. Total Credit and Available Credit. Some Applicants are slowly going into debt by using Credit Cards to pay their monthly expenses. The problem occurs for you when they have no available credit left to use. Soon after that you can expect late rent payments.
For example if Total Credit is 10,000 and used credit is 9,000 there is only $1,000 left for the Applicant to use for bills. If the Applicant is going into debt at a rate of $500 per month it will be only three months before you have a problem.
5. Check Evictions
If there are several evictions you might not want to be the next. This is obvious, but what if there is only one?
Ask the application for the cause of the eviction. The two most common causes are loss of income or a major Medical problem. It may have been remedied. Be careful of snide answers. It is probably incorrect that ‘The Landlord had it in for me.
In general, past eviction history is the least accurate factor when evaluating the possibility of defaulting on a Lease. Still, it is quick and easy to check. To make your life easier get a filtered report to reduce the numbers of listings of different people with the same name.
6. Check Criminal History
A major crime in the past few years is not a good sign. Small, old crimes, however, are not usually a problem for prospective Landlords.
You need to check EVERYBODY moving into the Apartment. Sex offenders need to report to their neighbors but they don’t have to actually apply for Tenancy. That can be done by a friend or relative. It is not uncommon to have an apartment lease signed by a person who never lives there.
Make sure everybody who will be living in the unit provides a complete application so you can check them all.
