The rental market remains strong in many parts of the country. This is largely due to the fact that an increasing number of people are choosing to rent instead of buying a home. While the rental market may be stronger than ever, it is still important for landlords to exercise caution. Many people have been hurt by the economy and their credit scores have suffered the consequences.
Although each landlord has his or her own standards regarding the acceptance of new tenants, it is still critical to conduct comprehensive credit checks during a recession. Skipping this area of due diligence could likely result in regrets later.
A credit check certainly does not take very long and can be an inexpensive solution for your peace of mind. The fee for performing a credit check can even be passed on to your prospective tenants. Furthermore, most tenants are quite accustomed to paying such a fee or even for signing the permission form for you to conduct a credit check.
The process for a credit check actually begins when you ask prospective tenants to complete a rental application. As part of the application, you should ask questions about the applicant's work history, address history, and credit history. You should also ask questions about the applicant's prior landlords as well as personal references. Other questions you might consider asking include why the applicant is moving and if they have ever broken a lease.
Once you have this information, it is important to follow through and telephone the references your applicant has provided, including their prior landlords. In addition, it is important to actually run the credit check and verify the applicant's credit score. Bear in mind that it is crucial that you do not accept any credit reports from any source other than a verifiable source. In light of the recession, it is not uncommon for some rental applicants to attempt to provide a copy of their own credit report. This might seem as though it would save you the fee, but it can be quite risky. Manufactured credit reports are actually widely available. It is actually quite easy and fast to have verifiable credit checks run on prospective tenants by having a service manage the process for you. Keep in mind that you will need to have the applicant's consent for running the check.
The only way to truly know whom you are renting your property to is to run a credit check of your own. Make this a policy and stick to it. If a prospective tenant balks at the idea of granting authorization to have a credit check run, you may have dodged a problematic tenant.
As a landlord, you have the right to protect the interests of your business. One of the best ways to do this is to make sure you only lease to qualified tenants. During a recession, this can naturally be more time-consuming. Conducting comprehensive credit checks can help to ensure your tenants are qualified.