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6 Most common myths about tenant checks

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Selecting a suitable tenant is not unlike the hiring process. Finding a tenant who pays rent on time, communicates well, follows the rental laws and looks after the property takes some time and effort.

Tenant checks can help landlords to select the best tenants for their rental properties. Leaving things to luck is not an option. But it's important not to fall for common misconceptions about the screening process and make sure applicants are thoroughly vetted before signing tenancy agreements and exchanging keys.

Myth #1: Landlords should follow their gut

Good tenant screening starts with a pre-tenancy application. This will cover the necessary basics, such as the applicant's reason for moving, the number of occupants who will be sharing the property, whether they have pets or smoke. The landlord should never assume that an applicant's self-provided information is accurate and up to date. Some may misrepresent their income, their employment and their rental history. It becomes a landlord's job to take time and verify all the information provided through a consistent and thorough screening process. The instincts just aren't enough.

Although there is no sure way of knowing if someone will become a great tenant, tenant checks reduce the risk of getting a bad tenant because you have more information about the applicant and can make a more informed decision.

Myth #2: A good tenant = A high credit score

Credit scores can certainly be important in determining your potential tenant's payment history and habits. But an applicant with a high credit score doesn't necessary becomes a good tenant. A high score doesn't guarantee that someone is of good character or is a respectful neighbour. But it's also important to mention that someone with a bad or average score doesn't necessarily mean a "bad" tenant.

Younger applicants or applicants new to the country will have little to no credit history. This shouldn't immediately disqualify them as potentially good tenants.

When reviewing the applicant's credit records, pay attention to dates. Most information stays on the report for at least 4 years. Some events affecting the tenant's credit history might have happened in the past due to some life events that can be explained. If you're not sure - ask questions.

Myth #3: A tenant is better than an empty rental

If the number of received enquiries remains low, the landlord might be tempted to select the best applicant from the average pool of candidates to simply fill a vacancy. Unfortunately, there are no easy way outs from the bad tenant selection. With recent law changes, it's harder to terminate a tenancy than ever before. Being stuck with a "wrong" tenant can be incredibly stressful. Disputes cost money and time. So don't be too casual about who the property is rented to.

Myth #4: Running a tenant check on the person damages their credit score

Tenant credit checks don't affect the applicant's credit scores. Credit check bureaux will record the request as a "rental enquiry". This record will appear on the report but doesn't affect the credit score. However, credit enquiries (e.g. where the applicant is applying for a line of credit with the bank) may impact the score. Too many credit enquiries in a short period of time can work against people as it may look like they're in desperate need of credit and therefore pose a bad risk.

Myth #5: One reference check is enough

References are there to give landlords further insight into the applicant's behaviour as a tenant. Employment references are used to confirm the tenant's ability to pay future rent. Previous landlord references are used to verify the tenant's rental history. Personal references are used to highlight the applicant's personal qualities that would make them a good tenant.

Myth #6: Tenant checks are time-consuming

There are multiple tenant check options available to landlords online. Most checks are data-driven and should take minutes to complete. Employment, previous landlord, and personal checks require a human response and based on myRent checks are often performed within an hour but can take a day or two.

Tenant screening is arguably one of the most important things a landlord performs. And if chasing down all the necessary information, calling references and finding the right credit company to perform tenant checks sounds too painful and time-consuming, myRent.co.nz can perform thorough background checks for just $35. We'll spend the time conducting ID checks, credit checks, Tenancy database and Tribunal Orders searches and collecting landlord, employment and character references.

The information contained in this article is exclusively for promotional purposes. It does not in any way constitute legal advice and should not be relied upon as the basis for any legal action or contractual dealings. The information is not and does not attempt to be, a comprehensive account of the relevant law in New Zealand. If you require legal advice, you should seek independent legal counsel. myRent.co.nz does not accept any liability that may arise from the use of this information.


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