In order to have a landlord-tenant relationship without complications, the property owner should focus on approving the right type of tenants that can meet their range of obligations set out in the rental agreement. This could avoid future rent and eviction problems from happening and put both parties at ease. Landlords need to be firm and fair when it comes to sourcing a tenant for their premises or they could end up being way more trouble than their monthly rental income is actually worth.
Reaching a deal with a prospective tenant isn’t always that simple
Steps to assess if A Prospective Tenant is Creditworthy
Assessing the financial stability of a prospective tenant is sure what to inspect their credibility and could give you a clear indication of future prospects. It is advised to thoroughly check your applicant’s financial records and whether they are creditworthy or not. Here’s how you can assess if a prospective tenant is creditworthy:
If you’re lucky, your applicants might already be aware of the fact that they can obtain a free credit report from the credit bureaus that documents their current financial position. Should your applicant already have these credit score documents in place it would most definitely be beneficial and show that there is nothing to hide.
Chances are the most applicants won’t have all the documents in place, and you’ll have to do a credit check to create a shortlist of candidates.
For tips on how to source high-quality tenants when looking to rent your property check out our post – How To Find & Screen Quality Tenants
How to perform a background check
In order to perform this check, you’ll need written consent from your prospective tenant, should they refuse, landlords are allowed to take them out of consideration. Next, you’ll need a copy of their ID and Passport as well as a Tax number that will give you more detailed reports.
Landlords that aren’t as experienced in assessing the documentation might miss a few crucial warning signs or won’t always know what to look at when analyzing the documents and statements.
When you’re provided with the applicant’s three-month bank statements make sure to check if the payslip matches the bank statements, whether the payslip amount is enough to cover rent, and if the payments to previous landlords were made regularly, and on time.
Just because someone has great credit, doesn’t always mean that will make great tenant. Checking a prospective tenant’s credit record is just a part of the process as a whole, but having all the facts and documentation in place will most certainly give you peace of mind as a landlord.
For tenant applying to rent a property, it’s advised that they take the following steps to avoid bad credit history:
- Make regular payments to the creditor within the first week of each month
- Keep a record of all creditors and the amounts that need to be paid
- Keep a list of all payments made to creditors
- Read all clauses before signing a contract with a creditor
- Notify all creditors when you’ve changed your address
- Always attend to all correspondence from creditors or their legal team
If you don’t go through the proper steps you could be faced with an eviction and to find out how much that could set you back financially check out our post – What Will It Costs To Evict A Tenant
If you need advice on screening prospective tenants for credit worthiness or keeping your own credit record clean, get in touch with Le Roux Attorneys.