If you’ve been turned down when trying to rent an apartment or house, the reason could be that you’re not providing the information landlords look for in lease applications. Three common reasons that lease applications are rejected include: incomplete information, unverifiable information, and qualifications that don’t meet the landlord’s approval criteria. Potential tenants can increase their likelihood for approval by simply knowing what landlords look for in lease applications – then providing it. Standards for acceptance vary, but there are general items that almost all landlords look for during an application review.
Landlords typically assemble several documents and base their decision to approve or disapprove on the information found in them. They are:
- Credit report
- Criminal background report
- Eviction report
- Supplemental information provided by the applicant that verifies or explains issues found in the application and reports
Landlords need to find evidence of an applicant’s leasing qualifications somewhere in those documents. If the landlord has a lot of lease applications to review, they may be less inclined to work with applicants to request additional information and investigate issues. Knowing what landlords will look for and including it with the application without being asked for it could increase the potential for getting an application approved.
Here are ten things most landlords look for when reviewing a lease application.
1. Identity. Sometimes credit reports indicate that the identity of the applicant cannot be verified based on their social security number or driver license number. Landlords might be suspicious of potential fraud and will ask for additional proof of identity when this happens. Often the credit report system can’t verify identity simply because the applicant has not yet started building a credit history. Applicants in that situation may want to provide proof of identification with their application, such as a copy of a state ID card, driver license or passport. Obtaining a store credit card or low limit Visa or Mastercard can solve this problem – the system just needs to see some type of credit activity tied to the social security number.
2. Credit Score and Credit History. This might seem like chicken and egg, since credit history is a big factor in determining a credit score, but credit history and score do not always correlate. Even if an applicant’s credit score meets the landlord’s minimum requirement, credit history could cause a rejection in two ways: 1) string of late payments within the past one or two years, 2) high debt with big monthly payments. Let’s look at the second reason – big monthly payments. Most landlords want total scheduled monthly payments, including rent and utilities, to not exceed a specified percentage of monthly gross income. They’ll look at the credit report to see if the applicant has scheduled debt payments, such as a car loan or student loan payments, that when added to rent and utilities exceeds their guidelines. If credit history includes accounts sent to collection that are not currently being paid, the landlord may assume payments could start on those debts during the lease period and may estimate monthly payments based on the amount of a debt and a reasonable repayment period. Applicants should obtain a copy of their credit report in advance and make sure the information is accurate.
3. Rental History. Landlords frequently contact previous landlords listed on applications. The questions are usually basic – did the tenant comply with the lease and leave on good terms? Did the tenant leave owing the landlord money? Would the landlord lease to the tenant again? Actual questions will be formulated in accordance with applicable laws. Renters can help themselves by knowing that landlords do speak to each other and there is a way to streamline the process. Simply ask your landlord for a letter of recommendation. Even if you’re still renting from the landlord, let them know you will be moving and ask for a letter. I generally give tenants a letter of recommendation automatically at the move-out inspection if the property has been left in good condition and the tenant had been a good tenant. The letter provides a phone number and email address so a new landlord can contact me easily to verify the letter.
4. Evictions. Most landlords obtain a separate eviction report that obtains information from court records. If your name shows up on an eviction report and you’ve never been evicted, don’t worry. Eviction reports are often inaccurate because records are frequently tied to names, not social security numbers. Most of the time a landlord can see that the evictions in the report apply to another person with the same name and took place far from where you have ever lived. If you have been evicted, explaining circumstances of the eviction may convince the landlord to approve your application. Keep in mind that landlords can’t evict, only courts can evict, therefore the landlord reviewing your application will tend to believe that the court had just cause to order the eviction. Trying to explain away an eviction by saying you had personal problems with the landlord probably won’t get your application approved. Admitting you were unable to make payments because you lost your job (if that’s what happened) might go further toward getting your application approved.
5. Criminal Background. Laws regarding leasing to applicants with criminal backgrounds vary. Expect landlords to address this issue accordingly.
6. Employment. Landlords want to see a source of income, usually from steady employment. Make it easy to verify employment by providing contact information for the human resources department at your company. DO NOT provide supervisor information unless asked for it. Applicants providing a cell phone number for a friend posing as a supervisor is an old scam most landlords won’t fall for. My preference is to call a company’s main number and let them transfer me to the person identified in the lease application. If you’re self-employed, be prepared to show a business license or other proof that you are operating a business.
7. Income. Income can be verified by providing recent pay stubs from a verified employer or by authorizing your employer to release salary information when the landlord calls to verify employment. Self-employed applicants can show bank statements from a business account or tax returns. Some landlords accept financial statements from a licensed accountant, such as a CPA. Qualifying income can also come from investment accounts or annutities that produce steady income when the applicant has no employment income.
8. Number of Residents. Over-crowding is a big issue in many communities and tenants are required to provide the name of everyone who will reside on the premises. Even if only two people residing in the rental will be “on the lease” as responsible for paying rent and lease compliance, the name of everyone who will live in the property must be provided in lease applications. In most areas, maximum occupancy for a two bedroom apartment is five people, two in each bedroom and one in the living room. Applications listing seven residents in a two bedroom unit are likely to be rejected.
9. Pets. Before applying, ask the landlord about their pet policy. Unless the pet in question is a support animal as defined by the Americans With Disabilities Act (ADA), pets may be restricted.
10. Vehicles. Most leases offered today do not allow tenants to work on cars or park unregistered vehicles on the premises. Vehicles listed on the application that have no license plate number are a red flag.
Leasing requirements are governed by federal, state and local regulations, so criteria landlords use to approve or reject a lease application can vary greatly from one community to the next. Not all landlords may look at every item I’ve described and they may take into consideration several more items I haven’t listed. If possible, ask the landlord for their specific requirements before submitting an application. One consistent requirement is that applicants who are not approved must be notified of the reason for disapproval. Knowing what landlords look for in lease applications could give applicants a better chance of being approved.
If you have questions about the lease application process, drop me a line: Contact Us.