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First, require all prospective tenants to fill in a rental application form. This form will provide you with the necessary information to carry out a background and credit check. Ask for current contact details, the names and addresses of current and previous landlords and employers, social security number, driver's license number and bank account numbers for credit check.
Second, include a credit report authorization form with the rental application. Section 604 of the Fair Credit Reporting Act requires that landlords ask permission before running a credit check. Of course, a landlord can deny a consumer the ability to rent if he or she does not wish to authorize a credit check. Landlords, not the credit reporting agency, are responsible for requesting and recording credit check authorizations.
Third, run a credit report for your applicants with all three main credit reporting bureaus: TransUnion, Experian and Equifax. Credit reports will tell you about your prospective tenant's credit history: foreclosures, bankruptcies, unlawful detainer lawsuits, evictions and other credit-related public record events. They will also provide you with a credit score for each applicant. The credit score rates the financial reliability of the consumer; the higher the score the better.
Fourth, hire a tenant screening company to carry out a background check on your applicants. A background check can include a state and national criminal report, a sex offender database search and prior address history verification. Tenant backround checks can cost anything from $20 to $50, depending on the thoroughness of the investigation.
Fifth, contact your applicant's current and previous landlords to ask for references. Call the current employer to confirm income, and question other references to make sure the information provided on the application form is correct.
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