Tenant screening is critical to finding trustworthy tenants, but it can be a lengthy process. If you haven’t carefully thought out your methods for selecting tenants, you risk legal liability, troublesome tenants, and threats to the stability of your business.
Tenant screening practices are typically dictated by state or federally mandated obligations and a landlord’s values. It can be challenging to navigate both fair housing laws and your responsibility to interpret the information you find.
However, certain tools and resources can ease the tediousness of screening. For instance, property management software companies offer tenant screening features directly on their platforms.
Tenant scoring systems are another way to streamline the screening process. Whether or how you use a tenant scoring system is ultimately up to you, but many landlords find them useful and successful.
Here are a few reasons you should use a tenant scoring system and how it will benefit your rental business.
Tenant scoring systems are objective. Let’s say you don’t currently use a scoring system but have a list of values and principles you screen by. What do those statements look like? If you have items like “strong character” and “responsible” on your list, you might find these vague terms difficult to reliably enforce during screening.
Instead, a tenant scoring system allows you to assign weighted points to your tenant criteria. Instead of relying on instinct or intuition (which aren’t always correct and could land you in legal trouble), use a more objective scoring system to quantify and rank applicants’ eligibility.
There are many tenant scoring templates available online. If you need some ideas, try reviewing a few examples before crafting your own.
One of the many issues with subjective screening is that it cannot be reliably equitable. Even implicit personal biases can creep into screening practices and sway decision-making.
When we’re talking about housing, it’s especially important that you create and keep fair screening practices. Not only is it legally mandated, but it also makes your rental business accessible to all who might be interested in your properties. Fair screening also builds a credible reputation for your business.
Tenant scoring systems are a practical extension of your goal of equality. They can help you focus on the factors that do matter (income, credit history, prior evictions, good references) and veer away from factors that cannot and should not be involved (familial status, race, gender/sexuality, etc.)
Equality is a central pillar in many businesses. However, offering fair and inclusive housing opportunities is not just a good idea—it’s the law.
The Federal Fair Housing Act is the broadest and most far-reaching fair housing law. According to this legislation, it’s illegal to discriminate against tenants due to their membership in any of the seven protected classes: race, color, national origin, gender/sexuality, religion, familial status, and disability.
If you own a rental business, you should have structural policies and practices in place to affirm your commitment to equality and compliance with the law. A tenant scoring system can be one of these.
As documentation that officially establishes your criteria and processes for screening, a tenant scoring system serves as protection against potential discrimination or favoritism claims. You can clearly prove that a denial was based on allowed factors and reproduce the applicant’s eligibility as calculated by your scoring system.
Another benefit of a tenant scoring system is efficiency. Establishing clearly defined procedures for evaluating tenants’ eligibility makes screening quick and painless.
The time you save matters. If you’re screening tenants, you likely have vacancies that need to be filled, units that need advertising, and properties that need to be renovated or cleaned. The faster you screen tenants, the sooner you can fill units.
Plus, if you’re tech-savvy and can digitally implement your scoring system, you could even automate it for maximum efficiency.
Finally, tenant scoring systems are accommodative and customizable. There’s no one universal scoring system that all landlords should use. Instead, you should customize your scoring system to suit your values and standards for tenants.
For instance, maybe your rental business is struggling to retain tenants. You can prioritize long-term renting in your scoring system by assigning a higher weight to factors like rental history and references. This way, the tenants who are the most likely to renew their leases will be scored with the highest eligibility to rent your properties.
Tenant Scoring: Principles into Practice
Tenants are, of course, more than the numbers we assign them. However, metrics are useful ways to make quick evaluations and decisions in the best interests of your rental business. Objectivity, equality, legal protection, efficiency, and customizability are all ways that tenant scoring streamlines those interests. If you aren’t already using a tenant scoring system, doing so can only increase the overall efficacy of tenant screening.
Also read How to select a suit?