Tenant Screening and Renters Insurance

Tenant Credit Reports

Property owners and managers understand the importance of properly screening tenants as part of the rental application process. Obtaining accurate credit information before you sign a rental agreement should be the first step in the screening process. The credit report contains important information about a prospective tenant. You’ll receive information that tells you if an applicant has ever:

  • Filed for bankruptcy
  • Been late or delinquent in paying rent or bills
  • Been convicted of a crime, involved in a personal injury claim, or other type of lawsuit
  • Been financially active enough to establish a credit history

Coming Soon With Rentables you can obtain credit information from one of the leading and most respected credit reporting bureaus, directly from Rentables.com and its built right into our property management software. Rentables integrated credit reporting services can save you time and money. Spend more time managing your business and less time compiling information.

Legal Issues with Tenant Credit Reports

When selecting tenants you may legally obtain a credit report and use the information, provided you don’t illegally discriminate. Federal law requires that you keep only information needed from a tenant’s credit report to make an assessment.

Tenant Screening

Most property managers do not have the ability to order credit reports directly from the bureaus. Generally, credit reports are obtained through an agency or tenant screening service. You pay a fee to the reporting bureau plus a fee to the agent or screening service.

Many states allow a fee to be charged to prospective tenants for the cost of the credit report itself and sensible compensation for your time and effort. The fee should be reasonably related to the cost of the credit check ($30 to $50 is common). Prospective tenants should be made aware of the purpose and amount of any credit check fee and that the fee does not guarantee the rental property.

You should only collect credit report fees from those who are genuine potential renters and not collect fees from obliviously unqualified applicants. You should return any credit check fees collected if you did not actually obtain a report or did not use the fee for the intended purpose.

If negative information in a credit report prevents you from renting to an applicant or you charge a higher rent because of negative information, the prospective tenant must be given the name and address of the agency reporting the information (Fair Credit Reporting Act). You must also inform the applicant of their right to obtain a copy of their credit report from the agency that reported the negative information if they request the information within 60 days after rejection.

Renters Insurance

Renters insurance provides most of the benefits of homeowners' insurance excluding coverage for the dwelling and structure. Renters’ insurance provides liability insurance and covers the tenant's personal property and other covered occurrences such as theft, vandalism, and fire. The property owner is responsible for insuring the building, but is not responsible for the tenant's belongings.

Many property managers require, in the lease, that tenants have renters insurance generally covering loss of use of the rental property, personal belongings, and personal liability. If renters do not or cannot obtain renters insurance then they may be unable to rent or lease the properties that they are interested in renting.

It’s inevitable when managing rental properties that “stuff happens”. When a renter damages or has an accident on your property it can be a real problem. If your renter does not carry insurance it can be aggravating and expensive. To avoid these situations, property managers should require tenants to carry adequate insurance coverage.

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You'll save time performing routine tasks such as:

  • Recording rent
  • Tracking PM fees
  • Payment processing
  • Generating owner statements
  • Emailing (or worse - mailing) monthly owner statements

Use the time you'll save to grow your business or to enjoy life's other pursuits.

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