Chicagoland Leasing and Management Blog

What information can you use to qualify prospective tenants?

Nora Bohanon - Wednesday, May 10, 2017
Property Management Blog

When looking to screen potential tenants for your rental property, there is a wealth of information that you’ll want in order to make an informed decision. You want to know that the tenant will be a good match, so you want to get all the pertinent information possible. However, there are a few things that you cannot use, so it’s important to know what’s legal and what’s not.

First of all, you can definitely use a credit report to qualify or disqualify a potential tenant. Legally, this is very sound. To run a credit check, you’ll need the prospective tenant’s name, current address, and either their Social Security Number or Individual Taxpayer Identification Number. You can order a credit report from any credit reporting agency, which will grab its numbers from one of the three major national credit bureaus: Equifax, Experian, or TransUnion. If the numbers look bad and you turn down the application, you’ll need to send an adverse action letter, informing the applicant of the reason for rejection, the name and address of the agency reporting the negative information, and the applicant’s right to obtain a free copy of the report. [1]

Next, another criteria you’ll want to qualify prospective tenants is their income. Sufficient income to pay rent is widely considered to be three times the monthly cost of rent; any less than that and you’re risking renting to someone who may not be able to pay all the time. An income statement is definitely something you’ll want to see.

Another important piece of information you can use is the prospective tenant’s rental history. Getting a record of their past evictions or any other transgressions on rental property is fair game and exceedingly important for you to know. Positive references from past landlords are likewise a good indicator that you’re looking at a solid bet. [2]

Verifying income, employment, bank account information, and credit report are the fundamental references you’ll need to know. On the other hand, there are a few specifically illegal reasons to refuse a potential tenant, thanks to fair housing laws. These include race, religion, ethnicity, gender, parenthood, and any disabilities. Additionally, certain states prohibit discrimination based on marital status, sexual orientation, and age. [1]

You are legally free to choose among potential tenants as long as your decision follows the law.

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