Use a Tenant Scoring System to Avoid Nightmare Tenants

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Damaged property. Late payments. Inconsistent communication. Loud noises.

These are things that every landlord wants to avoid when it comes to their tenants.

Fair and thorough tenant screening practices can help you avoid tenants that will make your life miserable.

A tenant scoring system will help you categorize information and better understand which applicant will make for the most reliable tenant.

Four steps ensure an effective tenant scoring system:

1. Set your primary goals.
2. Consider factors that will help you achieve those goals.
3. Create your comprehensive scoring sheet.
4. Have an attorney review your scoring system.

Now that we have the steps, let’s dive into each one in more detail.

Step 1: Set Your Primary Goals

With the right goals, you ensure that your criteria will match you with the ideal tenants. 

You’ll probably have two main goals with your scoring criteria:

1. Comply with Fair Housing regulations and protect yourself from discrimination lawsuits. 
2. Choose the most qualified applicant to fill your unit.

Regarding the second goal, the best tenants will pay rent on time every month, follow the terms of their lease, and respect other tenants and your property.

Step 2: Consider Factors That Will Help You Achieve These Goals

To stay focused on your primary goals, you should lay out specific criteria that will allow you to achieve each one.

Your first goal should be to comply with Fair Housing regulations and protect yourself from discrimination lawsuits. The Fair Housing Act forbids discrimination based on protected classes like race, color, religion, sex, familial status, disability, or national origin.

To avoid running afoul of Fair Housing laws, focus your criteria on factors like employment, income, and criminal history. If you stick to factors like these and apply your standards to every applicant equally, you shouldn’t have any issues.

Your second goal should be to choose the most qualified tenant to occupy your property. Develop legal ways to ensure you’re getting the best tenant for your property. As mentioned above, there are three things you should focus on here:

#1 Tenants who will pay rent on time and in full.

Here is what you should consider to determine if a tenant will pay on time: 

• Does the applicant have a monthly income that is 3x the monthly rent? 
• Does the applicant have stable, verifiable employment?
• Does the applicant have any considerable outstanding debts or collections? 
• Does the applicant’s credit report demonstrate financial responsibility? 
• Does the applicant have a positive rental history? 
• Does the applicant have a history of paying rent on time?
• Does the applicant have a history of evictions due to non-payment of rent? 
• Has the applicant been taken to collections for non-payment of rent?

#2 Tenants who will adhere to their lease agreement.

Here is what you should consider to determine if a tenant will pay on time: 

• Has the applicant been convicted of crimes considered harmful to people or property?
• Does the applicant have a history of lease violations?
• Does the applicant have a history of noise complaints?
• Does the applicant have a history of evictions due to lease violations? 
• Would the applicant’s landlord references rent to her again?
• Did the applicant falsify any application information?
• Does the applicant pay bills on time?

#3 Tenants who respect other tenants and your property.

This one is trickier than the others to decipher ahead of time. However, checking with previous landlords will give you an idea of what kind of tenant they’ve been in the past and how they’ll likely behave as your tenant.

Step 3: Create Your Comprehensive Scoring Sheet

Now that you have the criteria established, create a scoring sheet that you can use with every applicant. The more organized your scoring sheet is, the quicker it will be to decide who you should rent to. 

Think of your scoring sheet as a checklist. Compare the information from an applicant’s screening reports to the criteria on your scoring sheet. For every measure they meet, they get a point. The tenant with the most points at the end will be your most qualified applicant. 

Your scoring sheet can be filled out online or on a printed sheet. We recommend storing it digitally, so that you have easy access to it. Either way, you should always keep secure records of your scoring sheets for each applicant in case anyone makes discrimination claims regarding your application process.

Conclusion

As a landlord, one of your main objectives is to rent to great tenants. A reliable scoring system that abides by the Fair Housing Act is an excellent way to make sure you rent to great tenants.

If you use the right primary goals and support those with relevant factors, your scoring system will guide you to the best people for your property. And it will help you avoid tenants that would make your life difficult.

About the Author

Innago is a free, easy-to-use property management software solution, designed to save you time & money. Innago allows you to easily: collect rent, screen tenants, list properties, manage work orders, create applications, sign leases, organize financials, communicate with tenants, & much more! Learn more here