The Limitations of Online Tenant Screening Tools
Online tenant screening tools are easy and relatively cheap to use, but are they giving you the best overview of tenants’ backgrounds and reliability in terms of maintaining the property and paying rents on time?
If you’re dealing with applicants with high credit scores, this probably won’t be an issue for you. On the other hand, if you’re dealing with applicants with lower credit scores – well, you better read on!
Let’s look at some of the screening criteria which online services provide for (and which they don’t), as well as some ways DIY landlords can supplement their online screening with additional due-diligence.
Most of them will screen for some combination of these criteria, although additional fees may be required to access some of these features, depending on the service you use:
Credit History – Some online tenant screening tools just give you a credit summary or score, rather than a full credit report. But this means you won’t see information such as…
Credit Tradelines – We prefer to see the actual tradelines, so we can review actual payment histories and amounts owed on each. Score-driven services try to do all this for you with their artificial intelligence programs, but in our experience, this only really works for applicants with high credit scores. If your property is in a blue collar area, you may want to explore more robust options.
Criminal Background – Some online tenant screening tools give you both state and national criminal history checks, covering both terrorist alerts and sex offender lists, but others will only provide information for your state. This means a crime committed in Pennsylvania won’t show up on a search in Michigan, so make sure your service is giving you a comprehensive view of each applicant’s background.
Eviction History – Online screening services will often show if a person has been evicted in the past, but very few will tell you whether or not they had eviction proceedings started against them (but not ruled upon). This can be a crucial piece of information to have, especially if an applicant has been habitually paying late, and only pays rent after their landlord has initiated proceedings against them.
Residence History – This will show you all the places a tenant has reported living when applying for credit. Most screening services do not supply this information, which is very important in making sure an applicant isn’t hiding a problem with a past landlord.
Hopefully, this has shown that some landlords may need to stay away from using tenant screening services, or at least be careful when using them. We suggest you read about our suggestions on a better way to qualify applicants on their income than the traditional “income = to 3x rent” here.
We feel this gives you a better overview of what online tenant screening services do, and when you should use them. If you have any other additional screening procedures that you think we’ve missed, share them in the comments below.
Image Courtesy of: Oleg Magni