As a renter, you might want to know if you’re eligible to rent your desired property before applying for a lease. Not only does this save you time, effort, and money from applying for a lease you might not get, but also allows you to check if the information the rental owner will get is accurate and complete.
In this article, we will show you how to do a rental background check on yourself and what to look for in the process.
Red Flags Property Owners Look for
Before learning how to do a rental background check on yourself, you have to know what rental owners will be looking for. Here’s a list of things most owners will consider red flags:
- History of bankruptcy or foreclosure
- History of eviction
- A rent-to-income ratio that is more than 30%
- A FICO credit score of less than 650 or a VantageScore of less than 638.
- Inconsistencies in income and employment
- Unfavorable reference from the current or former property manager
- Criminal charges
Please be aware that rental owners may have different criteria, therefore, different red flags, but some items, like a history of foreclosure and eviction, are very common among owners. That said, it’s best to check the property owner’s criteria before applying for a lease. An experienced property manager will put a clear set of criteria on their listing or will have them available for you if you ask.
Conducting a Background Check on Yourself
Get a Credit Report
One of the first things homeowners check when conducting a tenant screening is your credit report, so you want to make sure all the information you have here is complete, accurate, and up to date.
Credit reports contain information about your credit accounts such as credit cards, mortgages, student loans, or vehicle loans. It also shows history of bankruptcies and foreclosure.
The Fair Credit Report Act (FCRA) entitles you to a free copy of your credit report every 12 months. As such, you are given a chance to make sure the information they have about you is accurate, complete, and up to date. This also gives you a chance to correct the errors if there are any.
The only source authorized by federal law to give you your free credit report every 12 months is annualcreditreport.com. Alternatively, you can request a credit report from any credit reporting company for a fee.
Check Your Credit Score
A credit score is a number ranging from 300 to 850 which uses information from your credit report to come up with a number that measures your likelihood of paying on time. Like credit reports, a credit score is often used by rental owners to determine if you fit their initial criteria.
There is no standard credit score required to accept renters. However, Rentcafe’s analysis of more than 5 million applicants reveals that the average credit score of accepted rental applicants is a VantageScore of 638 or a FICO score of 650.
Equifax recommends that you get your credit score using the following ways:
- Checking your credit card, financial institution, or loan statement – some companies have started providing credit scores for their customers which could be found in the statement or online account dashboard.
- Purchasing your credit score – you can buy your credit score directly from the three major credit bureaus (TransUnion, Equifax, and Experian) or other providers like FICO.
- Using a free credit scoring service or credit scoring sites – some companies, like Credit Karma, calculate your credit score for free.
Keep in mind that your credit scores may vary depending on the data used by the performing agency, timing, and scoring models so don’t be surprised if you see a slightly different credit score elsewhere.
Calculate Your Rent-to-Income Ratio
Your rent-to-income ratio tells you how much of your income goes to paying rent. Most property managers use 30% as their benchmark. This means no more than 30% of your income should go to paying rent.
To calculate the maximum rent you can afford based on the 30% benchmark, simply multiply your monthly income by 0.3 (30%). For example, if you earn $5,000 a month, you should spend no more than $1,500 on rent ($5,000 x 0.3).
Other property managers will simply require that your monthly income be at least three times the rent.
Request a Copy of Your Criminal Record
According to a TransUnion report, 44% of property owners will not overlook the criminal history of an applicant. This makes prior criminal histories the third-highest concern for rental owners.
You might be wondering why you should check your criminal history when you’ll know for sure if you’ve committed one.
A 2019 article by NCLC reports that errors committed by criminal background check companies continue to deny thousands of Americans employment and housing. Their research reveals that these companies continue to generate reports that:
- Mismatch the subject of the report with another person
- Include sealed or expunge records
- Omit information about how the case was resolved
- Contain misleading information
- Misclassify the offense reported
That means it is in your best interest to take a look at your own criminal history before applying for a lease.
The best way to know your criminal history is to request a copy of your criminal records from the FBI, state police, or state public safety office.
If you find one that is a mistake, report them to your state before applying for a lease. If you have an existing record, you can check if you are eligible for expunging your record which permanently removes them from your criminal report.
Speak With Your Current or Former Property Manager
Most property owners would want to speak with your current or former rental owner to get a better idea of how you are as a renter That is why knowing how they will refer you is important when conducting a background check on yourself.
Let your property manager know of your intention to put them as reference. Confirm whether you had any late payments or if you have broken any lease agreements during your tenancy period. This will allow you to correct any errors or explain the situation before your new property manager calls.
Moreover, some rental owners do not interact with their renters as much prompting them to use your record as the only source of information. Reintroducing yourself will allow them to remember you as their renter and possibly give you a better reference.
Know Your Rights
The Fair Housing Act prohibits homeowners from denying an applicant based on their race, religion, sex, national origin, familial status, or disability. They can, however, deny an applicant based on the information found on consumer reports during the tenant screening process.
If your application is completely or partly rejected based on the information found in your consumer reports, the FCRA requires property owners to provide an Adverse Action Notice. This gives you the right to see the information reported about you and dispute the accuracy and completeness of the information provided by the consumer reporting company.
That said, it’s important to remember these rights as you’re browsing through property listings.
By getting a copy of your credit report and criminal record, checking your credit score, calculating your rent-to-income ratio, and speaking with your current or former property manager, you will be able to identify the red flags rental owners use in screening renters.
These are the things commonly sought by owners of properties in looking at applicants or desired renters of their properties.
Doing so allows you to select a rental property in which you fit the criteria, therefore, saving you time, effort, and money in the process. Furthermore, seeing your consumer reports before applying for a lease allows you to correct any inaccurate information that may deny you to rent that property.
Now that you know how to do a rental background check on yourself, you can put it into practice before applying for a rental property.