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Nov 14

Resident Screening: Is more better?

Posted by: Entrata | Category: Leasing,Newsletters,Technology

Resident Screening When it comes to screening potential residents, it’s not enough anymore to run a simple credit check and call it a day. While a standard credit check can provide important data about the applicant, they only provide a narrow view of the risks that may be associated with the lease. With the wealth of accessible data available today, properties can do much more to avoid bad debt risk and reduce fair housing liability.
 
This isn’t to say that properties should allocate undue resources to running NSA-style investigations on every applicant who comes through the door. Rather, communities should establish specific criteria that are appropriate for the property and then use tools and automations to ensure those criteria are applied equally to every applicant. The right strategy, applied consistently in each step of the screening process, i.e., gathering, evaluating, and approving applicant data, can be just as effective as more expensive, invasive options.
 
Gathering Data
 
Screening products offer an array of searches, from credit to criminal checks to eviction history. It’s always a good idea to make sure that criminal checks offer manual searches for the jurisdictions where instant online searches are not available, and that your screening product allows you to set conditions based on criminal categories or time elapsed since conviction. Credit checks can include information such as income, payment history, credit tradelines, debt, and collections, all of which can help assess the risk of your applicant[s]. And don’t ignore an applicant’s credit history from non-traditional credit sources, such as pay-day loans or cash advances. A screening product that uses the Vantage scoring model can be helpful here, as a whole generation of renters may not be using traditional credit sources.
 
Of particular importance is collecting information about previous rental collections and default rates. The Experian website states that “renters with one prior debt have a default rate four times as high as applicants with positive rental history. For renters with two or more prior rental debts, the default rate is six times as high.”
 
Evaluating Data
 
Once you’ve determined which searches are appropriate for your applicants and you’re looking at all that data, things can get sticky. Leaving it up to individual leasing agents – or even property managers – to evaluate screening results is just asking for trouble: no one is 100% impartial. Many screening tools will use algorithms to allow you to establish proprietary scoring ranges and set pass/fail or recommended actions. For example, the system, not the agent, will determine if a credit score merits an adjustment to a security deposit, or whether a criminal charge merits an automatic fail. This is the best way to keep fair housing liability to a minimum.
 
Each property’s criteria should be established in advance, and filters established that are appropriate for the community. Then the software should take over. This has the advantage of keeping sensitive personal information about applicants secure, and it means that applicants aren’t kept waiting to find out whether or not their application has been approved. The last thing you want to do is leave a potential resident waiting so long that they move on to another community before you can evaluate their status.
 
Approving Applicants
 
With the right system in place, this is the easiest step in the process. Your conditions are preset and have been automatically applied. Data evaluation has been completed, and automatic notifications have been received. It’s important at this point to keep override rights to a minimum — usually one or two people at the corporate office should have permission to override the criteria. Keep tight controls on permissions to view credit reports as well, this is not information that the entire leasing team needs to see.
 
As with so many leasing processes, the kind of tools you have can simplify or complicate the process. Property Solutions is pleased to offer ResidentVerify, a tool that provides comprehensive screening capabilities, proprietary scoring, and automated notifications. If you’d like a demo of smart screening, contact your Client Success Manager today.