What to do if your tenant has no history?
May 19, 2020 MicroBilt News
Landlords and property managers might come across a tenant applicant with no credit or rental history. This poses a problem for landlords because they want to be confident they’ll receive the rent on time and their property will be respected. This is especially true in a time where the COVID-19 pandemic prevents in-person meetings in many states, making it difficult to conduct full-fledged interviews. Fortunately, rental and credit histories aren’t the only mechanisms landlords can use to select good tenants. If your tenant has no history, you can still effectively screen them using alternate methods.
Run a background check
A background check can often highlight things about a prospective tenant a traditional rental or credit check wouldn’t pick up on. For instance, a comprehensive background screening searches civil records, criminal records, and the department of motor vehicles. While this doesn’t show landlords and property managers their record of financial responsibility in the same fashion as a credit report does, these screenings do give a snapshot of a person’s character, highlighting any negative blights on someone’s records or illuminating any warning signals.
Employment verification is another way potential tenants can be screened. This can be included in a full background check which highlights how long the person has been employed and whether they have consistently held a job. Rental applicants can also be asked to supply a letter from their employer confirming their status. Additionally, landlords can request copies of their last three paystubs to see if the tenant would be able to afford the rent.
Obtain character references
Letters of reference aren’t a guarantee but they can help determine a person’s positive attributes. Good potential tenants without a history should be able to easily provide letters demonstrating their character. Ask the tenant for references from former employers, college professors, volunteer coordinators, or anyone else who could vouch for a person’s character.
Request a co-signer
Another way property owners can protect themselves is to ask the prospective tenant to have a co-signer on the lease. This way, rent can be better guaranteed with a co-signer who does have a positive credit history.
Extra security deposit
Some landlords and property managers ask for a larger security deposit to offset the risk of non-payment of rent if their state laws allow it. If the tenant appears willing to provide you with a little bit of extra security money (i.e. equal to one month on top of the traditional deposit collected), this is a positive sign and can offset any losses if rent is late.
It’s much easier to sign leases with tenants when a rental and credit history can be confirmed, but even this isn’t possible, it doesn’t mean they’ll be bad tenants. However, due to unknown history, they also could be a risk. Tenant screening processes are laborious, but are worth the investment of time. Applicants who are attentive, cooperative, and willing to go the extra steps to successfully sign a lease are more likely to be good tenants. On the other hand, if a person is uncooperative or sluggish in meeting verification requests, it’s safe to say they’ll probably treat their obligations similarly.
The COVID-19 pandemic has created challenges for many landlords and property managers. Fortunately, many of the tools and approaches to screen applicants with no history can be conducted virtually and digitally. Microbilt has the tools to help you make smart rental decisions. To learn more about our comprehensive screening for tenants, contact us today.