Frequently Asked Questions
Description of Products
1) Do I have to be a member or can any landlord or property manager use this service?
2) Can I charge the prospective tenant for running a background check?
This is a common practice among landlords and property managers, this charge is usually referred to as the tenant screening application fee. Which will cover your tenant background screening. Depending on your background check needs, will determine the tenant screening application fee. This fee is usually collected before you do the background screening and is nonrefundable to the prospective tenant. Please make sure this is in writing and signed by your prospective tenant. If you have any questions on this matter please consult your attorney.
3) What happens after I've run a credit report on a prospective tenant and it comes back with negative information, can I decide whether or not to rent to the perspective?
You should have clear policies on what is acceptable and what is not. Once you have decided (you should check your state laws as to an appropriate score) then that should be your bar. If that prospective does not met that bar then you should not rent to that prospective. A credit score of 680 or higher is considered "fair or better" and generally the excepted score. If today you chose to accept a tenant with a low score and the next day you deny someone for having the same score or higher you go be getting into an area of discrimination. One way to avoid making a costly mistake, is to use our InstaScreen Tenant Scorecard. If you turn down a prospective tenant you must give that applicant a Denial Notice in writing and keep a copy in your file to document why you have turned down the prospective in order to be in full compliance with the Fair Housing Laws and the Fair Credit Reporting Act. A prospective tenant who has been denied may within 60 days of the date of the report, request a copy of the rental report and upon receiving this report they have the right to submit a 100-word statement regarding any disputed information.
4) What is a credit score?
A credit score in the United States is a number representing the creditworthiness of a person, the likelihood that person will pay his or her debts. Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers. Widespread use of credit scores has made credit more widely available and cheaper for consumers. The best-known and most widely used credit score model in the United States, the FICO score is calculated statistically, with information from a consumer's credit files (i.e., Payment history, amount owed, length of credit history, new credit, types of credit in use, etc.). It provides a snapshot of risk that banks and other institutions use to help make lending decisions. Applicants with higher FICO scores may be offered better interest rates on mortgages or automobile loans.
Credit scores are designed to measure the risk of default by taking into account various factors in a person's financial history. Although the exact formulas for calculating credit scores are secret, FICO has disclosed the following components: 35% - Payment history - Late payments on bills, such as a mortgage, credit card or automobile loan, can cause a FICO score to drop. Paying bills on time will improve your FICO score. 30% - Credit utilization - The ratio of current revolving debt (such as credit card balances) to the total available revolving credit or credit limit. You can improve your FICO scores by paying off debt and lowering the credit utilization ratio.
Alternatively, applying for and receiving the credit limit increase will also drive down the utilization ratio. Closing of existing revolving accounts will typically adversely affect this ratio and therefore have a negative impact on their FICO score. 15% - Length of credit history - As your credit history ages it can have a positive impact on their FICO score. 10% - Types of credit used (installment, revolving, consumer finance, mortgage) - You can benefit by having a history of managing different types of credit. 10% - Recent search for credit - Credit inquiries, which occur when you are seeking new credit, can hurt your score. Individuals shopping for a mortgage or auto loan over a short period will likely not experience a decrease in their scores as a result of these types of inquiries, however. While all credit inquiries are recorded and displayed on your credit report for a period of time, credit inquiries that were made yourself (to check your credit), by your employer (for employee verification) or by companies initiating prescreened offers of credit or insurance do not have any impact on your credit score.
There are other special factors which can weigh on the FICO score. Any money owed because of a court judgment, tax lien, etc. carry an additional negative penalty, especially when recent. Having one or more consumer finance credit accounts may also be a negative. FICO score range - A FICO score is between 300 and 850, exhibiting a left-skewed distribution with 60% of scores near the right between 650 and 799. According to FICO the median score is 723. Each individual actually has three credit scores for the FICO scoring model because the three national credit bureaus, Experian, Equifax and TransUnion, each has its own database. Data about an individual consumer can vary from bureau to bureau. These studies point out that people with higher scores have fewer claims. Studies also indicate that the majority of insureds pay less in insurance through the use of scores.
5) What are the basic facts about the Fair Housing Act
What Housing Is Covered?
The Fair Housing Act covers most housing. In some circumstances, the Act exempts owner-occupied buildings with no more than four units, single-family housing sold or rented without the use of a broker, and housing operated by organizations and private clubs that limit occupancy to members.
In Addition: It is illegal for anyone to:
* Threaten, coerce, intimidate or interfere with anyone exercising a fair housing right or assisting others who exercise that right
* Advertise or make any statement that indicates a limitation or preference based on race, color, national origin, religion, sex, familial status, or handicap. This prohibition against discriminatory advertising applies to single-family and owner-occupied housing that is otherwise exempt from the Fair Housing Act.
Additional Protection if You Have a Disability
If you or someone associated with you:
* Have a physical or mental disability (including hearing, mobility and visual impairments, chronic alcoholism, chronic mental illness, AIDS, AIDS Related Complex and mental retardation) that substantially limits one or more major life activities
* Have a record of such a disability or
* Are regarded as having such a disability your landlord may not:
* Refuse to let you make reasonable modifications to your dwelling or common use areas, at your expense, if necessary, for the disabled person to use the housing. (Where reasonable, the landlord may permit changes only if you agree to restore the property to its original condition when you move.)
* Refuse to make reasonable accommodations in rules, policies, practices or services if necessary, for the disabled person to use the housing.
Example: A building with a "no pets" policy must allow a visually impaired tenant to keep a guide dog.
Example: An apartment complex that offers tenants ample, unassigned parking must honor a request from a mobility-impaired tenant for a reserved space near her apartment if necessary, to assure that she can have access to her apartment. However, housing need not be made available to a person who is a direct threat to the health or safety of others or who currently uses illegal drugs.
Requirements for New Buildings
In buildings that are ready for first occupancy after March 13, 1991, and have an elevator and four or more units:
* Public and common areas must be accessible to persons with disabilities
* Doors and hallways must be wide enough for wheelchairs
* All units must have:
o An accessible route into and through the unit
o Accessible light switches, electrical outlets, thermostats and other environmental controls
o Reinforced bathroom walls to allow later installation of grab bars and
o Kitchens and bathrooms that can be used by people in wheelchairs.
If a building with four or more units has no elevator and will be ready for first occupancy after March 13, 1991, these standards apply to ground floor units. These requirements for new buildings do not replace any more stringent standards in State or local law.
Housing Opportunities for Families
Unless a building or community qualifies as housing for older persons, it may not discriminate based on familial status. That is, it may not discriminate against families in which one or more children under 18 live with:
* A parent
* A person who has legal custody of the child or children or
* The designee of the parent or legal custodian, with the parent or custodian's written permission.
Familial status protection also applies to pregnant women and anyone securing legal custody of a child under 18.
Exemption: Housing for older persons is exempt from the prohibition against familial status discrimination if:
* The HUD Secretary has determined that it is specifically designed for and occupied by elderly persons under a Federal, State or local government program or
* It is occupied solely by persons who are 62 or older or
* It houses at least one person who is 55 or older in at least 80 percent of the occupied units, and adheres to a policy that demonstrates an intent to house persons who are 55 or older.
A transition period permits residents on or before September 13, 1988, to continue living in the housing, regardless of their age, without interfering with the exemption
In Mortgage Lending: No one may take any of the following actions based on race, color, national origin, religion, sex, familial status or handicap (disability):
* Refuse to make a mortgage loan
* Refuse to provide information regarding loans
* Impose different terms or conditions on a loan, such as different interest rates, points, or fees
* Discriminate in appraising property
* Refuse to purchase a loan or
* Set different terms or conditions for purchasing a loan.
What Is Prohibited?
In the Sale and Rental of Housing: No one may take any of the following actions based on race, color, national origin, religion, sex, familial status or handicap:
* Refuse to rent or sell housing
* Refuse to negotiate for housing
* Make housing unavailable
* Deny a dwelling
* Set different terms, conditions or privileges for sale or rental of a dwelling
* Provide different housing services or facilities
* Falsely deny that housing is available for inspection, sale, or rental
* For profit, persuade owners to sell or rent (blockbusting) or
* Deny anyone access to or membership in a facility or service (such as a multiple listing service) related to the sale or rental of housing.