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Background screening is a crucial step in the tenant selection process. In today’s competitive rental market, landlords and property managers need to take extra precautions when considering prospective tenants in order to protect themselves from loss of revenue and property damage. Knowing how to read and interpret background screening results will help you make the best decision possible for your properties.
As you know, one piece of information that should always be checked is a prospective tenant’s credit report and rental credit check score. A good credit record means they are less likely to have issues with paying rent on time or damaging your property – both critical factors in renting out units. The higher the number , the better their history has been with debt repayment, which makes them more desirable as a potential renter.
But just as important in your decision-making process are the other reports available to you. Each is designed to give you a more thorough picture of your applicant over the last seven years than their credit report alone can provide.
Nationwide Bankruptcies, Tax Liens and Civil Judgments
When a person or business cannot repay their outstanding debts, they can file with the bankruptcy court to seek relief from their creditors. Those creditors may or may not receive some or all of the money owed to them. A tax lien is a lien imposed by law upon a property to secure the payment of taxes while a civil judgment is a ruling against a defendant in a court of law. The judgment can arise from small claims, unpaid debts or property damage caused by negligence.
Until the major credit bureaus decided to eliminate bankruptcies, tax liens and civil judgments from credit reports a few years ago, a landlord running a credit check could see if their applicant had any of these problems in their past. Now, it is necessary to order a separate search for these important items.
Social Security Number (SSN) Fraud Check
Identity theft is a growing crime, so it is important you verify that your applicant is who they present themselves as. An SSN fraud search will comb through more than 19 billion public and proprietary records to verify potentially fraudulent identities.
State or Nationwide Eviction Search
The eviction search is one report you hope will come back marked “no records were found.” Unfortunately, this determination may not tell the whole story. Utilizing the applicant’s Social Security Number, the database is searched for eviction filings and judgments for the past seven years.
But only cases that went through the court system will appear on the report. The tenant may have been late with their rent payments and asked to leave by the landlord without going through the expensive steps of taking them to court. If legal proceedings were not filed and a judgment not rendered, it will not appear in the eviction search results. In addition, the fact that a record was discovered does not necessarily mean that the applicant was actually evicted from an apartment or was found to owe back rent. Many times, a lawsuit may be filed in error or deemed by the court to lack merit. Ordering a Previous Address Tenant History and a Landlord Verification report will give a much fuller picture of the applicant’s rental background.
Previous Address Tenant History (PATH)
Using the applicant’s Social Security Number, the PATH report searches consumer credit databases, telephone companies, city and state public records and over 100 additional data sources. The results will include all names associated with the Social Security Number, including aliases and phone numbers, reporting dates, the approximate year the SSN was issued and whether the individual is deceased.
In addition to possible addresses and in what county each address is located, you will learn how many jurisdictions they have lived in. If they have lived in more than one county during the last seven years, you might want to order additional County Criminal Searches.
An unusual number of reported addresses and/or phone numbers does not necessarily indicate anything negative. These sections often contain business/work addresses and phone numbers and other random numbers. Review them with the applicant to determine whether they are a true red flag.
State or Nationwide Criminal Search
The Fair Credit Reporting Act (FCRA) limits a criminal records search to the past seven years and includes all records where the individual was convicted. Arrests without conviction are not included. The search covers the Circuit, Municipal, Superior and/or District Courts and includes the most current and past felony and misdemeanor convictions as well as some traffic violations. The results will show the defendant’s name, any aliases, date of birth, county case number, charge and disposition. The databases are updated weekly or monthly depending on the jurisdiction. It should also be noted that criminal search results are subject to various laws which may limit or restrict the ability to display certain results.
Sex Offender Report
The sex offender search is similar to the criminal search and also goes back seven years. Results are for convictions only and do not include arrests. In addition to all 50 states and Washington, D.C., records are pulled from 150 American Indian Tribes, American Somoa, Guam, Northern Mariana Islands, Puerto Rico and U.S. Virgin Islands. The databases are updated monthly.
TeleCheck Check Verification
This report is important because it indicates whether your applicant has written bad checks. Check transactions that have been sent through the TeleCheck system are analyzed for bad activity. Checking account information is also examined. More than 374,000 business locations count on TeleCheck for their check acceptance services.
The company’s continually updated database includes more than 51 million bad check records. If your applicant has a history of passing bad checks, it will show up in the TeleCheck Check Verification report along with their full name, driver’s license number, its state of issue and whether they are approved for check acceptance. The prospective tenant’s driver’s license number or state-issued ID are used to prepare this report, so be sure to include it when you place your order.
OFAC, Terrorist Databases and Federal Jurisdictions Searched
The search results from the Office of Foreign Control (OFAC) can include some of the most serious national and international crimes, such as kidnapping, smuggling, identity theft and tax evasion. Results are culled from the Federal and Interpol Most Wanted lists and include the past criminal record of the defendant and the seriousness of their crime.
Terrorist and narcotics traffickers are included in the OFAC search and results have their full name, date of birth, address, country and any aliases. It offers in-depth information on terrorist incidents, groups, trials, leaders and members. Updated monthly, these databases also include criminal convictions for counterfeiting, hijacking, mail fraud, embezzlement and more.
Whenever you are leasing out your home or an apartment to a tenant, it is vital that you perform a comprehensive background check. It can be tempting to only do the bare minimum and trust your intuition, but that is not enough. A thorough background check will help ensure that they are responsible people who won’t cause any problems for you or your other tenants in the future. The information provided with these reports can give you all of the details on what kind of person they are, so make sure to read them thoroughly.
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