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11 Comments on Do you let prospects run their own credit report?
Great post. Many people do not understand that the consumers report is different from the retail report. The ID theft scammers are crafty and SCARY. Beware and make sure you are working with a credible lender.
I strongly advise against allowing consumers to provide their own credit/resident screening report.
I don't believe that you will find significant differences in content between the credit reports, but the practice itself could create significant issues. Taking into consideration the amount you have invested in the property it's difficult for me to understand why anybody would be reluctant to spend an additional $25-$50. Especially when the expense is covered by an application fee. All it takes it ONE bad tenant to erase the giant ($25-$50) savings.
Please keep in mind that resident screening reports are in a constant state of evolution. At any given time a consumer can pay or stop paying their bills, get arrested, open new accounts, close existing accounts, etc. All of these factors will impact the content of the report. Some savvy consumers know this going into it, generate their own report, then do all of the above!
The stronger your application process and resident screening the stronger your retrun on investment.
REQUIRE, not ask and hope they do it, REQUIRE every applicant of legal age to provide their own individual rental application, GOVERNMENT ISSUED PHOTO ID (drivers license, state ID, Passport or Military ID) and compare the information on the ID to what appears on the application. REQUIRE the applicant to provide you with copies of at least 2 months work of pay stubs (this verifies name, income, employers name, sometimes SSN) or a copy of their taxes (not all 102 pages, just the first few pages that lists their name, address and income) and a copy of their current lease (tells you where they live, who they rent from, how much they pay and when they will no longer be responsible for paying rent on that unit <--VERY IMPORTANT). Then require them to pay a NON-REFUNDABLE application fee to cover your resident screening expenses. This discourages the random applicant or those who know they can't qualify, and serves as a very cost effective way of pre-screening and controlling your costs. Then find a good resident screening company. (You always Google "resident screening") Find out what they offer, costs, see a sample of their reports, ask for references. THEN USE THEM!
If you tell me spending $25-$50 on a resident screening report is too much to protect your investment, I will tell you that you're wrong.
Lee@Rentalresearch.com
Lee - the reports are COMPLETELY different...the consumer report is "dumbed down" and does not have the history, etc that makes the RETAIL report valuable.
Unfortunately, many individual landlords who do not have access to tenant/credit reports think this is sufficient to protect their investment when they don't know enough to know they don't know enough.
It's not about the money, my applicants pay me $25 which more than covers my costs; it is the newly found practice of taking a consumer report that is worthless and a SCAMMING landlord stealing the applicant's identity.
Charging an application fee is a screening tool as the ones with bad credit hopefully will not apply. I want to run my own reports to make sure the report is legit.
Bob - I want the applicant's credit check/application fee by CHECK - not cash...I want to know that they are financially responsible enough to be able to maintain a bank account. I also double check the address information on the check against the address information on their application AND their credit report.
Craig's List and their scams... Thanks for the heads up.
Wallace, I'm surprised to here about this. I've had my perspective tenants get their own reports for a few years now. I have 40 apartments, and never thought it was worth me hooking up with these credit reporting agencies.
I haven't had any problems and I use them more for verification of their application and what they've verbally told me. Like real names, previous addresses, employment, etc. generally someone who had a bad credit report or had something to hide never followed thru.
Peter - the reports that consumers run for verification information purposes is not the same as the one that retail users obtain from the super bureaus or third party re-seller.
If they are providing the report, you won't have the double check for duplicate SS#, SS# holder may be deceased, or other verification of the information....by inputting the information from their application, you ARE verifying their income...them giving you information on their own report is not verification - they are just copying the information....
Trust but verify!
Wallace, I'm talking about a credit report from experian, is this what you mean or is it something else? so a ask them to get a full credit report from experian (or either of the other 2 major credit reporting agencies) along with a fico score.
A credit customer/applicant CAN NOT GET A RETAIL CREDIT REPORT ON THEMSELVES unless they BREAK THE LAW and run a retail report on themselves.
The FREE reports that are available annually are for INFORMATION only to the customer and do not contain the necessary EXTRAS that retail users or third party screening firms use to make a CREDIT DETERMINATION.
I had to take a 1-day class to learn how to READ the current retail credit report format. The client report is severly dumbed down so that credit reporting agencies are not inundated with questions, etc. These reports are ONLY available because of federal legislation.
You want a "comfortable ride" - take my LEXUS
You want to go 4-wheeling - take my husband's JEEP
Both have 4WD - both get you there - not the same "RIDE"
Great information for this NEWBIE PM; a wise person told me long ago:a smart man learns from his/her mistakes; a smarter man learns from "other peoples" mistakes
9 out of 10 times I opt for the latter. Thanks for the sound advice. I already knew that there were 2 distinctively different credit reports; but its duly noted how critical it can be to USE the one I thought and you verified
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