Are you about to rent for the first time? You may be aware that a rental application involves a background check, but you are not sure what this entails.
Here is a comprehensive guide to navigating this important part of the application process. It will demystify background checks, empowering you with the knowledge needed to get into your very first apartment.
What do background checks include?
Understandably, landlords want to review the financial, rental, and criminal history of prospective tenants. This typically includes roommates, spouses, and adult children as well.
It begins with verifying your identity. Rental applicants provide their full name (including middle name, if applicable), date of birth (DOB), social security number (SSN), and phone number. Personal identifiers ensure that the background check is done on the right person. This is often as simple as presenting your driver’s license or other government-issued ID.
Background checks may take several hours to several days. To accelerate the application process, make every effort to provide all the information requested by all the parties. This includes a co-signer, if applicable.
Pets are increasingly welcome in apartment communities. Management will want to verify details if pets are a part of your family. They’ll want to confirm that size, breed, and other characteristics align with established guidelines.
Consider a self-check
If you are looking for a little peace of mind before applying for an apartment, consider doing a background check on yourself. Evaluate your strengths and weaknesses as a prospective renter. Learn to see things from a landlord’s perspective.
1. Review your credit report
Begin by obtaining a copy of your credit report. You can request your credit report for free at AnnualCreditReport.com. Also, many credit card issuers provide credit scores right within their apps. Much of the information comes from the three major credit bureaus: Equifax, Transunion, and Experian. Credit reports itemize both revolving and installment tradelines like credit cards, auto loans, mortgages, and personal loans. They also include past addresses, name variations, and collections.
Learn more at the credit education page at myFICO. It offers a wealth of information about credit score calculations.
What credit score do you need? When it researched the scores of applicants in different regions, RentCafe found real differences. Scores might average in the high 500s in one area or as high as the low 700s in another. Also, landlords and property managers often have varying standards.
Two of the most common ways to improve a credit score are, 1) making payments on time, and 2) paying down credit card debt. Keep in mind that a lower credit score may be offset to a degree by solid references and/or a cosigner with good credit.
Keep in mind that landlords and property managers often obtain scores weighted to emphasize rental history. For example, TransUnion calculates its TruVison Resident Score. Lessors have varying standards for renting their properties. Variations may relate to supply and demand, relative tolerance for vacancies, or other factors. A first-time renter without a rental history might deal with this by having a co-signer.
A credit report may contain misinformation due to error or fraud. If there is a problem with yours, contact the credit bureaus. A consumer also has the right to add an “account-specific” or “general” statement to their credit report. For example, a late payment might have been due to a medical emergency or natural disaster. Chase examines the pluses and minuses of adding such a statement to your credit report.
2. Assess your ability to pay
Landlords and property managers look for signs that an applicant will remit the rent promptly. What amount of income is sufficient? One comprehensive rent affordability study found that the average rent-to-income ratio nationwide was 23%. However, there are some markets, like New York City and Los Angeles, where the ratio exceeds 40%. Generally, however, rent should be roughly one-third of gross income or less.
Since first-time renters lack a rental history, other variables often get more attention, like income and employment history. For first-time renters, there are times when such things do not tell the whole story. An applicant may have access to other funds, for example. Detail any circumstances that increase the money available for rent payments and other essentials.
3. Address adverse information
Overall, a background check explores a prospective tenant’s character and dependability. It also includes comparing applicant information with a national criminal database. Therefore, be upfront about any pending legal case or past felony conviction. Under the rules of the Fair Credit Reporting Act (FCRA), an arrest may be reported for up to seven years. A conviction is reported indefinitely. Be proactive so you can present your side of the story. Help a property manager to better understand past issues from your perspective.
Open, candid commentary speaks to your trustworthiness in the here and now. It may also be useful to address other factors like repeated job changes or fluctuations in income.
It may also be helpful to explain the circumstances of a past bankruptcy. Note that a Chapter 7 filing stays on a credit report for 10 years, while a Chapter 13 filing remains for seven years. The former liquidate debt; the latter involves a plan for debt repayment. Learn more at bankrate.com.
A smooth application process
Much is at stake when a landlord agrees to a year-long lease. Multiply monthly rent by twelve, and you’ll quickly see how important each rental decision is to the owner of the apartment community.
Many landlords streamline rental applications with property management software. This online process includes a place to authorize the background check. Typically, spouses, multiple roommates, and co-signers are all subject to background checks. Avoid delays by having their identifying information in hand.
The property manager cross-references provided information with the data obtained via a background report. Discrepancies can cause delays. Therefore, make every effort to submit accurate information from the start. Inaccurate submissions may delay the completion of a background check. You might even get passed over in favor of another applicant whose information is in order.
Make it easy for a property manager to reach out to your personal references. Provide detailed contact information whenever possible.
About Draper and Kramer
Draper and Kramer is a full-service real estate firm founded in 1893. D&K’s apartment communities use state-of-the-art property management software to streamline the application process.
You’ll find D&K luxury apartment properties in Illinois, Missouri, Texas, Arizona, and Colorado. Browse our complete selection of rental opportunities here.
