Approximately 36% of Americans are renters, with 20% of them being foreign-born.
Landlords spend a great deal of their time screening international applicants before giving them tenancy. The aim is to find high-quality tenants who won’t default on rent payments.
Screening applicants usually entails conducting a credit check to determine the tenants’ creditworthiness. The screening process can be quite challenging if the applicants are foreign-born. Some of them don’t have a Social Security Number yet, so there’s limited data about them.
If you happen to screen a tenant without a Social Security Number, this is how you can go about it. There are four distinct methods you can use, and each will help get the applicant’s financial history.
1. Use the Individual Taxpayer Identification Number
Any foreigner who comes to the U.S. and pays taxes must be issued with an ITIN. The Internal Revenue Service (IRS) is keen on ensuring that foreign-born nationals get registered. With the ITIN, it’s easy to track the tenant’s rental history consumer report.
Unfortunately, sometimes you can’t run a tenant screening test from the ITIN. Just be sure that your tenant application form includes a field for the number.
2. Request for Bank Statements for 12 Months
If when screening applicant you can’t find any information through the ITIN, try bank statements. A year’s worth of bank statements will provide you with useful information. You can scrutinize the reports to see how regularly the tenant pays their bills.
Other details to check are whether the tenant has adequate income to meet expenses. Besides, if they’ve written a bad check before, it’ll reflect on their statement. An entry for a bounced check tells you what might happen to you in the future.
3. Ask the Tenant for Proof of Income
An applicant who’s serious about renting out an apartment should provide proof of income. This will demonstrate a solid financial standing. Don’t just trust the information provided; call the employer to verify.
Some employers are willing to cosign lease agreements for their employees. If this happens in your case, you’ll be assured of consistency in rent payments.
4. Use the Services of an International Tenant Screening Service
Screening tenants can be a tedious and time-consuming process. The above three methods may not provide all the details you need. This is where the services of a professional screening company come in.
These companies specialize in checking and verifying international background information about foreigners. These include criminal histories and credit reports. The companies are well equipped to provide you with the financial details you seek.
The company will ask you to provide them with the applicant’s former address, visa number, and passport information.
Advantages of Using Company Screening Services
Using a company in screening international applicants provides you with some benefits. As earlier mentioned, it saves you time and increases the chances of getting more detailed information. Besides, the services remove the responsibility of having to deal with the client directly.
They make the process simple by providing the reports in readable formats. They also offer their recommendation whether you should approve or decline the application. In case of any problems, the company will be available to answer and clarify your questions.
All data provided by the company is handled with secure encryption. You can access it through a password-protected account that also offers you data storage. For greater peace of mind, the screening services provide you with more information than you’d find when doing the screening personally.
You might be worried about the screening practices applied by the companies. Rest easy, knowing that the Fair Housing Act governs the companies. The laws protect you so that you get trustworthy tenants right from the start.
Information Contained in the Screening Report
When using the services of screening companies, you’ll get more than just the financial and criminal report. Here’s what you can expect to get:
I. Eviction Records
As a safeguard for you, the company can help you do an eviction check. The report will show every location listed with a verified match to an address recorded previously.
II. Past Address History
For a more comprehensive picture of the applicant, you can get information about their previous address. The report entails previous and current homes and rentals and current and previous employers.
III. Aliases Report
This refers to other names the applicant might have been known by previously. The report links the applicant to the institutions where the names were used. The complete information helps provide a clearer picture of the applicant.
IV. Employment Record
The report is a verification of the employers the applicant has had. It checks this information against the dates to help substantiate the employment claims.
V. Medical Collections
This is another metric used to assess the past credit history of the applicant. Any medical bills submitted for collections can provide useful financial information.
VI. Foreclosure Checks
A foreclosure check is an essential indicator of creditworthiness. It’s important to a landlord because it has a lot to do with property mortgage obligations.
VII. Bankruptcy Report
A public records search will help find any past bankruptcies in the history of the applicant. It highlights any debt problems the applicant might be having or may have had in the past.
VIII. Criminal Record Check
The criminal record report provides information like arrest records, the filing date of court actions, and court record ID. It also highlights charge details with disposition, statute ID. Take note that the report will only show convictions and some information may be limited.
IX. Credit Check
This check will supply you with the credit score of the applicant. It provides a recommendation of whether you should accept the application or not. The credit summary contains details of multiple credit accounts like mortgage, installment, revolving, and closed with balances.
Avoid Discrimination in the Screening Process
When screening foreign applicants, you might be tempted to put them under extra scrutiny. However, keep in mind that the Fair Housing Act outlines what information to gather. It also cautions landlords against altering the application process for different tenants.
The application process you use should accommodate the needs of all classes of tenants. If, for example, you request bank statements from one applicant, do so for all the others.
Citizenship Status
Check what the law says before you ask any potentially discriminatory tenant questions. Some states like New York and California, don’t allow you to ask about the applicant’s citizenship status. Other states are flexible in matters of citizenship.
In such states, the law allows you to refuse tenancy to any applicant who can’t prove their citizenship status. However, if you ask for citizenship status from one applicant, do so for all the others.
Lastly, don’t do the screening in fear. This means that you shouldn’t shy off from rejecting unqualified tenants. If an applicant fails to meet one of the requirements you’ve outlined, you can reject their application.
On the other hand, be careful when dealing with international students. If you’ve been accepting their application without any credit history, other foreigners should not be rejected.
Consider Accepting Foreign Credit Reports
It’s worth noting that foreign credit is acceptable in the tenant screening process. Highly educated foreigners especially command higher incomes. This, in turn, makes them have excellent credit reports.
Sometimes, tenants reject foreign reports, which shouldn’t be the case. If the tenant isn’t able to carry over their credit history, it doesn’t mean the credit profile in the U.S. is thin. It also shouldn’t be a reason for you to lock them out of the rental market.
In most of the times, you’ll realize that these foreigners make for ideal tenants. You may have to go through a manual and tedious process to determine their worthiness. You can rely on utility bills, bank statements, income statements, and alternative data to complete the process.
By unlocking the foreign credit report, you’ll be able to
- Increase occupancy rates
- Reduce operational costs
- Improve risk management
A foreign applicant is no different from a local one. Ensure you provide a rental application and be careful to check all references. This is the only assurance you’ll have in picking the right tenant for your unit.
International Applicants – Final Thoughts
As a landlord, you’ll get applications for tenancy from both local and foreign applicants. Screening international applicants is a long process that calls for a lot of scrutiny. The background checks you do on the applicants are to help you decide whether they can make good tenants.
Among the information you need is their creditworthiness. This can help you determine how reliable the applicant is in handling their finances. It gives you a glimpse of what to expect when rent is due.
You can hire a screening company to help you with the process. The firms handle the process professionally, providing you with more information that you expected. All this plays a role in helping you decide whether to take the tenant or not.
Remember you need to be fair in the screening process. The criteria you use on one client should apply to all others. As you strive to get good tenants, be a good landlord on your part.
