New landlords often skip over the important aspects of qualifying a renter before signing the lease. At the most basic level, a landlord should absolutely sign a rental lease agreement with a new tenant. Before signing the lease agreement, it’s always a good idea to ask for a rental application so that you can properly screen the potential renter for evictions, criminal background, and credit history. Even more so, however, is understanding the importance of retrieving the applicant’s proof of income. Often times, the tenant credit report you retrieve for the applicant will not provide specific details on their earning power. In other words, you can’t quickly verify what their salary is by looking at the credit report itself. The credit report will provide you with at-a-glance information of their credit score and details about liabilities – helping you understand whether the applicant is responsible with the money that they do make. But if you’re looking to understand how much money the applicant actually makes, you have a few different ways to verify their income.
- Pay Stubs - You can ask the renter to block out the Social Security number or other very personal information. You do need the business information so you can call to make sure the person is still employed there. You get the most current information this way.
- Bank Statements - This shows how much the person has in the bank. You can also see how often deposits are made and when. Tell the tenant to block out where checks were written if they are nervous about that.
- Invoices - In the current economy, some people work freelance or contract jobs. Traveling nurses typically take a job for less than a year, but they do have a contract for that time. Prospective tenants can show the invoices or contract to prove income.
- Court Orders - If someone has child support or alimony, they will also have a court order to prove it. Those documents are also public record most of the time.
- Credit History - As a landlord, you have the right to pull a credit history on a prospective tenant. The three credit agencies you can check with are Experian, Equifax and Transunion. This will give you a good idea of their current income, but not an exact picture. More importantly, it tells you how well the tenant pays his bills.
- Tax Returns - Another example that shows what the person made last year, but not their current income. Still, it is a good reference point. The future tenant can block out sensitive information.
Most importantly, you have the option of asking the applicant to attach any of this information to their online rental application submitted to you via VerticalRent. This allows you to securely and safely store this information to evaluate the applicant before making a leasing decision.