What To Do When Online Tenant Screening Fails
As a burgeoning real estate investor, you’re likely embracing the efficiency of online tools, including tenant screening services. These platforms can streamline the process of finding reliable renters by providing quick access to credit reports, criminal background checks, and eviction histories. However, what happens when this seemingly foolproof system hits a snag? When an online screening fails, it can be a frustrating and confusing experience. Does it mean your applicant is unqualified? Not necessarily. This article will guide you through the steps to take when online tenant screening doesn’t go as planned, ensuring you still land the best tenants for your properties.
Common Reasons for Online Tenant Screening Failure
Before panicking, it’s crucial to understand why an online screening might “fail.” It’s often not a rejection of the applicant, but rather an inability to complete the process due to various reasons:
- Identity Verification Issues: The most common reason. If the applicant’s name, address, or Social Security Number (SSN) doesn’t perfectly match databases, the system may flag it. This can happen due to recent moves, name changes, typos, or even minor discrepancies in how names are entered (e.g., “John Doe” vs. “Jonathan Doe”).
- Frozen Credit Reports: Increasingly, individuals are freezing their credit to protect against identity theft. A frozen credit report will prevent any screening service from accessing their financial history.
- Technical Glitches: Sometimes, the issue is on the screening platform’s end – a temporary server error, a database connectivity problem, or a bug in their system.
- Insufficient Information: The applicant may have intentionally or unintentionally provided incomplete information, making it impossible for the system to generate a comprehensive report.
- False Positives: In rare cases, a system might incorrectly flag an applicant due to data mix-ups or similarities with other individuals.
Your Action Plan When Online Screening Fails
Don’t dismiss an applicant immediately if the online screening fails. Instead, follow these steps to get to the bottom of the issue:
1. Communicate with the Applicant Immediately and Respectfully
The first step is to inform the applicant about the screening issue. Be transparent but avoid making assumptions or accusations. A simple message like, “We encountered a technical issue with your online screening report. Can you help us clarify some details?” is appropriate.
2. Verify Information with the Applicant
Ask the applicant to re-verify the information they provided, especially their full legal name, current address, previous addresses for the last 5-7 years (as credit bureaus often use this for verification), date of birth, and Social Security Number. Ensure there are no typos or discrepancies.
- Tip: If the applicant has recently changed their name or address, this is often the culprit.
3. Address Frozen Credit Reports
If the applicant has a frozen credit report, they will need to temporarily unfreeze it for the screening service to access their information. Explain this to them and provide clear instructions. They can typically do this online through the websites of the three major credit bureaus (Equifax, Experian, and TransUnion).
- Data Point: According to a 2023 survey by TransUnion, over 60% of consumers are aware of credit freezes, and a significant portion utilize them for security. This highlights the increasing likelihood of encountering frozen reports.
4. Request Alternative Documentation
If the online system still can’t process the screening, you can request alternative documentation directly from the applicant to verify their identity and financial standing. This might include:
- Government-issued ID (driver’s license, passport)
- Recent pay stubs (to verify income)
- Bank statements (to verify financial stability)
- Previous landlord references (verbal or written)
- Prior lease agreements
- Utility bills in their name at current/previous addresses
Important: Always ensure you are collecting a consistent set of documents from all applicants for fair housing compliance. Do not single out an applicant for extra scrutiny unless there’s a legitimate, documented reason.
5. Consider a Manual Background Check or a Different Service
If the online system truly fails for a legitimate applicant, you might need to perform some checks manually or use a different screening service. This could involve:
- Contacting Previous Landlords: Call their previous landlords directly to inquire about their payment history, property care, and general tenant behavior.
- Employer Verification: Call their employer to verify their employment and income.
- Public Records Search: In some cases, a manual public records search for criminal history or evictions might be necessary, though this can be time-consuming and may require professional assistance to ensure accuracy and compliance with relevant laws.
- Using a Different Online Service: If you suspect a technical glitch with your current provider, try a different reputable online tenant screening service.
Data Point: While online screening is efficient, a 2022 survey by the National Association of Residential Property Managers (NARPM) indicated that 78% of property managers still conduct direct reference calls to landlords and employers, even after online screening, highlighting the value of personal verification.
6. Know Your Local Laws
Be aware of fair housing laws and local regulations regarding tenant screening. Some jurisdictions have specific rules about what information you can collect and how you can use it. For instance, some areas restrict the use of arrest records that didn’t lead to conviction. Always consult with a legal professional if you are unsure.
Bottom Line
When online tenant screening fails, it’s not always a red flag. Often, it’s a fixable issue related to data entry or credit freezes. By communicating effectively with applicants, verifying information, and being prepared to take alternative steps, you can still successfully screen prospective tenants and minimize the risk to your investment properties. Remember to maintain consistent screening practices for all applicants to ensure fairness and compliance with fair housing laws. Your goal as a beginner investor is to secure reliable, long-term tenants, and a slight hiccup in the screening process shouldn’t deter you from that objective.
FAQs
- Q: How long does it usually take for an applicant to unfreeze their credit?
A: Unfreezing credit is typically immediate when done online through the credit bureau’s website. However, some bureaus might offer a temporary unfreeze for a specified period (e.g., 24 hours to 7 days), or a permanent unfreeze. It’s usually the applicant’s responsibility to manage this. - Q: Can I charge a second screening fee if I have to use a different service?
A: Generally, it’s not advisable to charge a second screening fee unless the first one was legitimately for incomplete information from the applicant. If the failure was due to a technical issue on the screening service’s end or a frozen credit report they promptly resolved, charging another fee could be seen as unfair and may deter good applicants. Stick to one application fee unless clearly outlined and justified. - Q: What if the applicant refuses to provide alternative documentation or unfreeze their credit?
A: If an applicant is unwilling to cooperate with the necessary steps to complete the screening, it can be a red flag. While you cannot force them, you are within your rights to decline their application based on an inability to verify their qualifications through your established screening process. - Q: Is it illegal to ask for an applicant’s Social Security Number?
A: No, it is not illegal to ask for an applicant’s SSN for tenant screening purposes, as it is essential for credit and background checks. However, you must ensure you are handling this sensitive information securely to protect the applicant’s privacy. - Q: Should I refund the application fee if the screening fails and I decide not to proceed with the applicant?
A: Application fees are typically non-refundable and are charged for the cost of processing the application, including the screening. If the screening fails (e.g., due to disqualifying information found), and you choose not to proceed, you generally do not need to refund the fee. This should be clearly stated in your application terms. - Q: How can I prevent online screening failures in the future?
A: Provide clear instructions to applicants on the accuracy of the information they submit. Briefly explain common reasons for screening issues (like frozen credit) in advance. Consider using a screening service that allows applicants to pre-check their identity verification or provides more direct support. - Q: What if the screening report comes back with a “caution” or “red flag” instead of an outright failure?
A: A “caution” or “red flag” means the screening process completed but highlighted areas of concern (e.g., a past eviction, a criminal record, low credit score). This requires careful review. You cannot discriminate, but you can decline based on legitimate, non-discriminatory criteria outlined in your tenant selection policy, such as a history of non-payment or convictions for crimes relevant to housing safety. Always consult fair housing guidelines.