Tenant screening is the only way to ensure tenants are qualified to rent your properties. While all landlords should be pulling credit, criminal, and eviction records, it’s not always clear what to do with this information. How do you know when a red flag might be okay and when it merits a denial?
Unfortunately, there isn’t a set of universal for screening tenants. Every landlord is different, so it’s only natural that every landlord has their own standards and priorities for their tenants too.
For many landlords, it can be helpful to quantify those standards. This can be accomplished through a tenant scoring system. A tenant scoring system is a weighted point system for rating an applicant’s eligibility to rent your property. Scoring systems make screening simpler, quicker, and fairer.
If you aren’t already, here are five reasons you should be using a tenant scoring system.
1. Avoid Legal Trouble
The most important principle of tenant screening is equality. You must screen each of your tenants the same way, every time. If you don’t, you could face discrimination or favoritism charges.
One way to avoid unwanted legal trouble is to use a tenant scoring system. A numerical justification for denying a tenant is much stronger than an anecdotal one, and it provides concrete evidence of your reasoning. You can also prove that you made your judgment based on the same standards you apply to every tenant.
You should always be transparent about your reasoning for denying a tenant. If a tenant asks, be truthful about why they were denied and show them the baseline(s) they failed to meet. Otherwise, you make yourself vulnerable to lawsuits, which are both costly and damaging to your reputation as a housing provider.
2. Document Your Reasoning
Similar to the above point, tenant scoring is useful for documenting your tenant decisions. Having organized records is important for more than just limiting legal and financial risk—good record keeping is also important for your future reference.
For example, let’s say you’ve done some market analysis and decide to raise your rent prices. If you don’t adjust your screening standards correspondingly, you could end up with an influx of tenants who can’t afford your rent.
Instead, you can easily reference your scoring system to make the necessary adjustments. Find out what income level you previously accepted and calculate how much you should increase your minimum accepted income in order to accommodate the raised rent.
3. Make Tough Decisions
During screening, you are bound to run into some difficult decisions. Applicants aren’t always clear yeses or nos. For example, let’s say you are considering two applicants. One has ample income but regular late credit payments on their record. The other has a strong credit score but less reliable income. Which do you choose?
This decision is best left to the numbers. With a tenant scoring system, you assign weighted points to each component (including credit and income) and make your final decision based on the result.
When it comes to close calls, it can be difficult to weigh the risks and benefits in your head. Tenant scoring systems make these subjective judgments unnecessary.
4. Remain Fair
Unfair screening practices can land you in major legal trouble. However, most landlords also just generally want their policies to be fair. Equal screening fosters respect between tenants and landlords while also building an amicable environment between tenants.
If you want to check whether your tenant application or scoring system is fair, it’s best to consult with a legal expert. They can identify any areas of potential liability and instruct you on the best ways to form and phrase your standards.
5. Ease Stress
Finally, using a tenant scoring system simply eases stress for landlords. Making decisions that have significant effects on tenants can be a stressful responsibility. You want to fill your units with only the most qualified tenants, but that doesn’t mean you won’t feel bad when an applicant doesn’t work out.
Scoring your tenants objectively is a good way to take stress and worry out of the equation. Focus on the standards you initially set and stick to them.
Implement Tenant Scoring in Your Rental Business
Tenant scoring makes a complicated process much easier to manage. Given its protection against legal risks and potential to ease landlord stress, scoring is a practice all landlords should embrace. By utilizing tenant scoring, you are bound to make the best choices for your business.
Tenant screening is the only way to ensure tenants are qualified to rent your properties. While all landlords should be pulling credit, criminal, and eviction records, it’s not always clear what to do with this information. How do you know when a red flag might be okay and when it merits a denial?
Unfortunately, there isn’t a set of universal for screening tenants. Every landlord is different, so it’s only natural that every landlord has their own standards and priorities for their tenants too.
For many landlords, it can be helpful to quantify those standards. This can be accomplished through a tenant scoring system. A tenant scoring system is a weighted point system for rating an applicant’s eligibility to rent your property. Scoring systems make screening simpler, quicker, and fairer.
If you aren’t already, here are five reasons you should be using a tenant scoring system.
1. Avoid Legal Trouble
The most important principle of tenant screening is equality. You must screen each of your tenants the same way, every time. If you don’t, you could face discrimination or favoritism charges.
One way to avoid unwanted legal trouble is to use a tenant scoring system. A numerical justification for denying a tenant is much stronger than an anecdotal one, and it provides concrete evidence of your reasoning. You can also prove that you made your judgment based on the same standards you apply to every tenant.
You should always be transparent about your reasoning for denying a tenant. If a tenant asks, be truthful about why they were denied and show them the baseline(s) they failed to meet. Otherwise, you make yourself vulnerable to lawsuits, which are both costly and damaging to your reputation as a housing provider.
2. Document Your Reasoning
Similar to the above point, tenant scoring is useful for documenting your tenant decisions. Having organized records is important for more than just limiting legal and financial risk—good record keeping is also important for your future reference.
For example, let’s say you’ve done some market analysis and decide to raise your rent prices. If you don’t adjust your screening standards correspondingly, you could end up with an influx of tenants who can’t afford your rent.
Instead, you can easily reference your scoring system to make the necessary adjustments. Find out what income level you previously accepted and calculate how much you should increase your minimum accepted income in order to accommodate the raised rent.
3. Make Tough Decisions
During screening, you are bound to run into some difficult decisions. Applicants aren’t always clear yeses or nos. For example, let’s say you are considering two applicants. One has ample income but regular late credit payments on their record. The other has a strong credit score but less reliable income. Which do you choose?
This decision is best left to the numbers. With a tenant scoring system, you assign weighted points to each component (including credit and income) and make your final decision based on the result.
When it comes to close calls, it can be difficult to weigh the risks and benefits in your head. Tenant scoring systems make these subjective judgments unnecessary.
4. Remain Fair
Unfair screening practices can land you in major legal trouble. However, most landlords also just generally want their policies to be fair. Equal screening fosters respect between tenants and landlords while also building an amicable environment between tenants.
If you want to check whether your tenant application or scoring system is fair, it’s best to consult with a legal expert. They can identify any areas of potential liability and instruct you on the best ways to form and phrase your standards.
5. Ease Stress
Finally, using a tenant scoring system simply eases stress for landlords. Making decisions that have significant effects on tenants can be a stressful responsibility. You want to fill your units with only the most qualified tenants, but that doesn’t mean you won’t feel bad when an applicant doesn’t work out.
Scoring your tenants objectively is a good way to take stress and worry out of the equation. Focus on the standards you initially set and stick to them.
Implement Tenant Scoring in Your Rental Business
Tenant scoring makes a complicated process much easier to manage. Given its protection against legal risks and potential to ease landlord stress, scoring is a practice all landlords should embrace. By utilizing tenant scoring, you are bound to make the best choices for your business.
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