How Long Do Background Checks Take For Apartments

This is office 8 of our Landlord'south guide to Tenant Screening. If you've landed here direct don't worry — nosotros encompass everything you need to know virtually rental groundwork checks below.

A rental background check is similar an x-ray that allows you to see beneath the surface of a potential tenant.

This image might ring a bong for cornball Simpsons fans.

Perhaps you lot remember the fourth dimension Homer went to the doctors for an x-ray.

The purpose of the rental groundwork cheque is to see whatsoever issues that might be hiding beneath the surface.

It's a elementary way to identify ruby flags and avoid problematic tenants.

In this post, we will answer the question, "What does a rental background check consist of?"

For the purpose of simplicity,we will use 1 of our SmartMove reports as an example for reference in this post.

Merely before we become alee of ourselves…. let's start with…

What Is A Rental Background Bank check?

A rental background check is an additional screening tool that allows landlords to run into diverse aspects of a tenant applicant's past behavior.

The majority of the data you'll run into comes from the 3 major credit bureaus:

• TransUnion
• Equifax
• Experian

This data helps to paint a picture show of how responsible a tenant might be.

Some landlords look at the overall credit score while others pay specific attending to the details of the written report.

Where Do Credit Bureaus Go Their Information?

"These three credit bureaus collect information from your creditors, such equally a bank, credit card issuer, or auto finance company. They likewise get information about yous from public records, such as belongings or court records. Each credit bureau gets its information from different sources and then the data in one credit bureau's report may non exist the same as the information in another credit bureau's written report." – Source FederalReserve

What Does A Rental Background Check Consist Of?

Here is what one of our SmartMove rental background checks consists of:

• Personal Details – provided by the applicant (pba)
• Address (pba)
• Income (pba)
• Total Credit Score (chosen ResidentScore by TransUnion)
• Accost History
• Employment History
• Tradelines
• Collections
• Consumer Statements
• Inquiries
• Public Records
• Eviction Records
• Criminal Records
• AKAs

Nosotros volition now cover each topic in more particular. Yous tin can click any of the items above to be pulled down the page to learn more.

Personal Details

The tenant applicant enters this information. All of this information is required except the middle name.

Read this if the applicant does non take a social security number or is unwilling to provide it.

The personal details provided in this box are important because there are only iii chief identifiers for whatsoever person:

1. Name
2. Date of Birth
3. Social Security Number

With over 325 million U.S. residents it's best to become all three identifiers.

Stephen White is the proper name of our CEO here at RentPrep and the last fourth dimension we checked at that place were over 2,600 matching names in the U.S. database.

This means it is still possible to have two Stephen White'due south with the same exact date of nativity.

Tenant's Current Address

This is also provided by the tenant and is important information. This current address should match the data provided on the rental application.

It'south a good idea to get understanding of the bidder'south current living situation.

Exercise not presume that they're currently renting every bit they might ain their electric current home and are going through a divorce or perhaps they alive with family unit currently.

A simple pre-screening question such equally "Do you currently rent, and if so, where?" should assistance yous better understand their current state of affairs. It'south a good thought to go along notes throughout the tenant screening process so y'all tin can reference back to them later.

Tenant Bidder'southward Income

With our SmartMove reports, the tenant applicant will write in their income.

At this betoken, the bidder should exist well aware of your rent to income ratio.

Your minimum income requirements should be laid out in your tenant screening criteria.

You lot'll desire to check the post-obit:

• Does the income listed on the rental background check match what they listed on their rental application?
• Practise they meet your minimum income standard?

Tenant Bidder's Credit Score

The rental background check through our SmartMove reports supplies a credit score ranging from 300 – 850.

The score volition display forth with a color range for like shooting fish in a barrel interpretation.

• Bad
• Poor
• Off-white
• Good
• Excellent

The score itself is determined by several factors that we will break down in the paradigm below.

A credit score is a compilation of many factors. TransUnion has created its own ResidentScore that is tailored to the rental industry.

This is washed by giving more than weight to payment history equally this information is more important to a landlord.

There is normally a discrepancy betwixt the credit bureaus and what they report for a credit score. Each bureau uses a different FICO model to assess credit.

This breakdown is specific to the TransUnion ResidentScore used with SmartMove. If your applicant runs their own credit through a different service, the number's may differ.

For case, Credit Karma uses a VantageScore model where TransUnion SmartMove is based on a FICO model.

The FICO model is a much better model (in our stance) because that it was the big majority of banks employ when they assess credit for a mortgage.

Credit Karma knows that their client wants to run across a better score. If they featured lower credit scores using the classic 2004 FICO model they wouldn't retain as many users.

Address History

Big databases are cultivating information on us all the time.

You signed upwards for a magazine 10 years agone at one residence and had a cell phone plan billed to your last residence. At that place'southward a chance that information was sold and eventually ended up in ane of the databases that TransUnion pulls information from.

This is how a background check is able to pull upward previous accost history. Go on in mind these addresses are non verified and practice not necessarily mean they were renting.

The bidder could have been living with family in ane of those known addresses.

Compare the accost history to what was included in your rental application. You'll want to call and verify with the electric current and previous landlords that the applicant was a tenant.

Good rental history is a sign of a stable renter. If you lot have someone with no rental history, yous're taking on more run a risk with an unknown commodity. In these instances (usually immature or student rentals) many landlords volition require a co-signer and/or increased security eolith.

Employment History

Similar to the accost history the employment history records are cultivated from large databases.

These records are not verified, so it'due south of import that you lot call the current employer to verify information.

In the video above our CEO, Steve White, walks you through how to practice an employment verification call.

Tradelines

Trade Lines (or tradelines) are accounts on a background bank check or credit written report.

This prototype shows the merchandise lines associated with our SmartMove reports.

The most common accounts for renters are revolving (credit cards) or installment accounts (anything with a fixed payment plan such as an auto loan or student loan).

You can learn more about trade lines from our noesis base article.

Collections

When a renter has a trade line that doesn't get paid the business relationship tin can be sent to collections.

The nigh mutual accounts are local utilities, credit cards, medical debts, and cell phones.

This is a reddish flag because most services exercise not go immediately to drove upon payment being late.

Creditors typically send an account to collections subsequently vi months of non-payment, but this time frame varies depending on account type.

A one-time late payment can exist considered a mistake, merely a drove on your report shows a pattern of non-payment.

Some collections can garner wages. This can only happen if the creditor takes the consumer to court and is awarded a judgment.

If yous have a renter with garnished wages, it means those funds are removed from their pay before they fifty-fifty see their paycheck.

Consumer Argument

A consumer (or your example a tenant bidder) has the opportunity to issue a consumer argument on their report.

The higher up image comes courtesy of creditcards.com and is a sample of what a consumer argument looks like. In this case a consumer statement to TransUnion pertaining to identity theft.

This is a concise statement of 100 words or less that gives the consumer an opportunity to explain things in their report.

There are two kinds of statements (according to Experian) that a tenant can request to exist added to their credit report.

1. An account-specific dispute
2. General statement

The account-specific dispute is linked directly to the account in question. If that account is removed from the report, the statement is removed at the aforementioned time.

The full general argument lasts up to two years on a credit report and is not deleted when a specific business relationship is removed from a study.

This could be helpful in explaining if their credit was negatively impacted due to fraud, medical debt, or an error or dispute with a business organization.

Inquiries

In this section of the background report, yous'll see whatsoever inquiries on the bidder'south record.

Credit inquiries are requests by a "legitimate business organisation" to check your credit. If your applicant practical for an auto loan with a bank, the depository financial institution would check their credit creating an research.

Credit inquiries are classified as either "hard inquiries" or "soft inquiries," and only hard inquiries have an consequence on a FICO score (source MyFico).

Our SmartMove reports & credit bank check reports are a soft pull on credit.

Let'south say your applicant recently applied for multiple student loans, multiple auto loans, and multiple credit cards.

The educatee and auto loans would each be treated as one enquiry. That'south considering it is considered normal to shop effectually for these.

Notwithstanding, each credit menu inquiry will be recorded every bit a carve up enquiry. This is because someone might be considered a higher credit adventure if they're trying to open multiple lines of credit in a brusk amount of time (source MyFico).

Public Records

Public records consist of the following:

• Bankruptcies
• Civil Judgments
• Tax Liens

There are ii types of bankruptcies.

Chapter 7 – These remain on a credit written report for x years from the filing date because in that location was no repayment

Chapter 13 – These are deleted seven years from the filing date considering there was fractional or full repayment

This is why some landlords will make concessions for a Chapter xiii defalcation (such as an increased security eolith) merely volition not accept an applicant with a Chapter 7 on record.

If your bidder has a civil judgment this means they were sued and lost and owed a debt past the court. These remain for vii years on a written report.

Tax liens occur when a tenant applicant has not paid their taxes. Unpaid taxation liens remain for xv years where paid revenue enhancement liens remain for seven years from the paid engagement.

Information volition display alongside the public record if it is paid, discharged or settled (source – Experian).

Every bit of July 1st 2017, the large majority of judgments and liens are removed from credit reports.

Due to these changes, it's estimated that 96% of civil judgments and 50% of revenue enhancement liens have been removed from credit reports. Bankruptcies were not affected (source).

This is if you're running a credit report. Our Basic, Pro and Platinum reports include a separate search exterior of a standard credit study that allows us to access this information.

Eviction Records

The image above shows a template of what is provided on an eviction tape in one of our reports.

Hither's a quick rundown of each item.

• Land – The country where the eviction took place
• Country – The county where the eviction took place
• Instance Type – Forcible Entry/Detainer is the legal wording for an eviction
• Plaintiff – Typically the landlord, apartment complex or property manager
• Judgment Corporeality – If left blank there could be no judgment corporeality but if rent is owed this could end upwards here
• Action Date: The engagement the eviction was processed in court
• Name – The person'south proper name that was evicted
• Address – The address they were evicted from

Previous rental history is a good indicator of how a renter will be in the hereafter.

That is why eviction history is one of the most telling items on a groundwork report.

TransUnion did a report where they analyzed records from nearly 200 backdrop comparison tenants who were evicted to those who were not evicted.

Applicant A will represent the tenants who were evicted while Applicant B represents those who were non evicted.

They constitute that 21.seven% of the evicted tenants had a prior eviction on tape whereas just 5.v% of the not-evicted group B had a previous eviction.

What does this data mean?

It means that if your tenant bidder has an eviction on record, they're much more likely to exist evicted again.

Going through a second eviction is similar the second time through a haunted business firm.

The fear of the unknown has been removed, and this is why you should be scared of someone who has an eviction on record.

They're non going to exist scared to go through another eviction.

Criminal Records

The means criminal records are to be considered is changing in many areas. It'due south important to check your local laws to make sure at that place aren't boosted considerations placed in your area.

We covered this in item on the tenant screening criteria folio in that you should no longer use a coating criminal policy with your rentals.

However, criminal records are permissible screening tools if yous tin can create a nexus (fancy word for connection) betwixt a criminal record and why someone wouldn't exist a proficient renter.

When yous lodge a rental background cheque the data gathered from criminal records comes from courts all over the country.

With our SmartMove reports, there are over 200 meg records searched at the State and Federal level.

A background check will get together all bachelor criminal information that is reportable.

A criminal record is reportable for up to vii years under the rules of the FCRA.

A criminal confidence is reportable indefinitely.

Departure Between An Abort And Conviction?

Arrested – This states yous were taken into custody but doesn't necessarily hateful you were convicted.

Charged – This is the next step where the prosecutor's office volition make a conclusion whether to charge you. This states criminal charges yous are facing.

Convicted – The person has been proven or declared guilty of the offense.

Sentenced – This is when a formal judgment is issued that spells out the penalization.

Why Does The Type Of Criminal Record Affair?

HUD spells it out clearly that you lot should not deny an bidder based solely on an abort without conviction.

"A housing provider who denies housing to persons on the footing of arrests not resulting in a confidence cannot prove that the exclusion really assists in protecting the resident safety and/or property."

This 10 page HUD document boils down to 2 paragraphs in the determination.

"Policies that exclude persons based on criminal history must be tailored to serve the housing provider's substantial, legitimate, nondiscriminatory interest andaccept into consideration such factors equally the blazon of the crime and the length of the fourth dimension since conviction. Where a policy or practice excludes individuals with only sure types of convictions, a housing provider will still bear the burden of proving that whatever discriminatory effect caused by such policy or practise is justified. Such a decision must exist made on a case-past-instance ground."

Basically, if yous're going to use a criminal record in your screening you must make a viable instance for why that offense jeopardizes the resident safety and/or property.

AKAs

AKAs stands for "also known as" a maiden name is the near mutual example of an AKA.

If your applicant's name is "Michael Smith" an AKA can be listed as "Mike Smith."

In the criminal sense, if the person committed a crime under a known alias (or pseudonym), that alias would show upward under this section.

Some people have a known alias that acts every bit a nickname while others have gone through the legal steps to modify their name.

Here's a listing of famous athletes that would most likely have an AKA evidence upwards on their background check.

• Babe Ruth (George Herman Ruth, Jr.)
• Bubba Watson (Gerry Lester Watson, Jr.)
• Chad Ochocinco (Chad Javon Johnson)
• Dabo Swinney (William Christopher Swinney)
• Karim Abdul-Jabbar (Sharmon Shah)
• Spud Webb (Anthony Jerome Webb)

How Long Do Background Checks Take For Apartments,

Source: https://rentprep.com/tenant-screening/rental-background-check/

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