Credit Checks – The Perfect Resident Might Look Perfect...But How Do You Really Know?

As a Kansas City property manager or owner, you know there’s a lot that goes into leasing your Kansas City apartment, home, condo or loft. From successfully marketing a property to the final signing of the legal documents, there’s something to do every step of the way. But, once the ink dries on the paper, the real work begins. At this point, the important job is to maintain a good landlord/resident relationship, which can be very difficult if the resident doesn’t hold up his or her end of the bargain.

So, how can Kansas City property managers and owners protect themselves from residents that might not pay? It’s not always easy, but there are tools to help you make informed decisions.

Performing a credit check on potential residents is one way to gauge whether the person getting ready to sign the lease can not only pay the monthly rent, but also has a demonstrated track record in meeting financial obligations.

A credit check is typically performed during the pre-lease screening process. This process isn’t always fool proof, but the little details that can be revealed during a prescreening can make a big difference down the road. They can also help you make sound decisions about who to lease to and who to deny.

Kansas City Property managers or owners looking to perform credit checks on future residents can do so through a number of companies, but perhaps the easiest are those that offer online services. These services can provide almost instant feedback about a potential resident’s credit history, giving you a very clear picture about their willingness to meet obligations and their ability to handle financial responsibility.

Getting permission to perform a credit check isn’t very difficult. Most people who have rented before will expect the request, but it’s imperative to get a signed release from the potential resident. The release should give you express permission to check into credit background and also provide such pertinent information as Social Security number, address, date of birth, proper legal name and any aliases such as maiden names. Before making up a release form, it’s a good idea to check with an attorney to make sure the document covers all legal bases as well.

Once you have the information you need and a legal release to back it up, getting a solid credit check on a potential resident is as easy as turning on a computer. Some of the major credit check sites are very simple to use and offer their services for as little as $9.95 a report, a cost that can be passed on to the potential resident within an application fee.

The reports most online services will provide will include such items as credit score, previous addresses, employers, debt and payment obligations, payment histories and more. The knowledge you receive from the reports combined with other information gleaned during the application process, such as rental references, can help you make an informed decision regarding whether to approve or deny a rental application.
The credit score that’s returned in credit check reports typically represent the standard FICO score, which is calculated by using a formula developed by Fair, Isaac & Company. The scores generally range from 300 to 900 with scores in the 600 to 700s typical.

Should you decide to turn down an application based on credit history, there are a few things you should do to protect yourself under Fair Housing Laws. Make sure you send the applicant a denial letter and keep a copy of it for your records. You need to provide information about why the application was denied, such as too high of a debt to income ratio.

If the applicant disputes the denial, they have 60 days to request a copy of the credit report and counter any claims made in the report. The denial letter should tell the potential resident where they can receive a copy of the report you based the denial upon.

Whether you approve or deny an application, it’s a good idea to keep a copy of the report for your records. Also, be sure to have good legal counsel when denying applications and setting up the screening process. Since laws tend to vary from state to state and city to city, the local experts will have the best advice regarding landlord/resident laws in your area. As a property manager or owner, you do have a right to check into potential Kansas City residents and it’s a very good idea to do so. Your Kansas City rental properties are valuable assets that you have a right to protect.