Here at Ziprent, we know the goal for any property owner is to minimize vacancy time and ensure tenants are placed at their properties with as little delay as possible. But as many owners know, placing a tenant without properly screening their applications can invite a whole host of problems down the line; late or unpaid rent, property damage, etc.
Accurate data from a trusted source is the key to effective decision-making when evaluating a tenant’s application. Ziprent achieves this by integrating payroll, banking, paystubs, tax returns, credits scores, and background data into an automated system that sets us apart from our competitors. By sorting the most trustworthy and accurate sources of information, and moving beyond outdated sources, like reference checks, our system allows us to fully vet an application within 15 minutes of it being submitted, empowering owners to evaluate applicants right away!
In this blog post, we’ll explore the various sources of data used by our system to screen applications, and show the accuracy and trust associated with each to give you a better understanding of how our system works.
Why reference checks no longer cut it:
Low Accuracy
Low Trust
Reference checks are often used as part of the tenant screening process when evaluating a tenant’s application. This involves contacting the tenant’s past landlords, employers, or personal references to gather information about their rental history, employment stability, and character.
While reference checks can provide insight into a tenant’s background, they are not foolproof and can have many flaws. One of the main limitations is that the information provided by references may be biased or subjective, as references may not be forthcoming about any negative experiences they had with the tenant.
Additionally, reference checks can be time-consuming and may not always provide complete information, as some references may not respond or may not have enough information to provide a full picture of the tenants history.
Reference checks are provided by the applicant, increasing the possibility of fraud or bad information. Reference checks are not an official document, which makes it more difficult to verify a reference’s credibility or relationship to the applicant.
Ziprent no longer uses reference checks, in lieu of faster and more reliable innovations that make them obsolete.
Screening a prospective tenant’s income
To evaluate a tenant’s income, Ziprent’s Instant Application Process uses a blend of multiple sources: integrating data from payroll providers, banks, paystubs, tax returns, and W2s.
Payroll Data
High Accuracy
High Trust
Payroll data comes directly from payroll providers either automatically or when tenants sign in to their payroll provider when filling out an application.
Payroll data is a valuable resource when evaluating a tenant’s application. This information provides insight into a tenant’s income and employment stability, which are important factors in determining their ability to pay rent, and ensuring that they meet the owners minimum income requirements.
By using payroll data as part of the tenant screening process, owners can feel confident in their decision to approve or reject a tenant’s application, and can better protect themselves from potential financial risk.
Banking Data:
High Trust
Medium Accuracy
Banking data can also be useful when evaluating a tenant’s application. While banking data can only provide medium level accuracy — because it can’t provide the source of all deposits — the data itself is highly trustworthy and comprehensive. This data comes directly from the tenant’s bank account when they sign in on Ziprent’s website.
This information can show the tenant’s financial situation, including their spending habits, savings, and payment history.
By reviewing banking data, Ziprent can determine if the tenant has a history of making timely rent payments and other bills. This information can also reveal any red flags, such as a history of overdrafts or bounced checks, which may indicate financial instability.
Ziprent uses banking data to calculate the tenants income by looking at the recurring nature of the income line and the total deposits for up to 12 months, helping us determine if the applicant meets the owner’s income requirement. The more the deposits reoccur in the records, the more consideration will be given to the income source.
It’s important to note that banking information is the only source that can be used for assessing the income of self-employed applicants.
Paystubs
High Accuracy
Medium Trust
Paystubs can offer a detailed view of the tenant’s income, including their hourly or salary rate, tax withhold, and any deductions. However, paystubs come from paperwork supplied by the applicant, which can make them more prone to fraud or forgery.
To identify possible fraud, Ziprent uses a provider that implements an Artificial Intelligence system to identify fraudulent pay stubs quickly and accurately, increasing trust that there is no foul play involved.
Tax Returns and W-2s
Medium Accuracy
Medium Trust
Tax returns show the tenant’s total income, deductions, and any tax credits they received, while W-2s show the amount of income the tenant received from each employer.
Since tax returns and W-2s are often delayed up to a year or more, the data accuracy and trust isn’t as reliable.
Because this information is supplied by the applicant directly, these documents can have a higher chance of forgery and fraud, which is why it’s important to contextualize it with other sources of data.
Credit Score
High Accuracy
High Trust
Credit score is often used as a key factor when evaluating a tenant’s application. This three-digit number provides a snapshot of the tenant’s creditworthiness, including their payment history, outstanding debt, and credit utilization.
By reviewing the tenant’s credit score, Ziprent can determine their financial stability and ability to pay rent on time. A high credit score typically indicates that the tenant has a good track record of paying their bills, while a low credit score may suggest financial difficulties or a higher risk of default.
The major credit score bureaus are Equifax, Experian, and Transunion. FICO and Vantagscore are scoring algorithms used by these agencies. The FICO score ranges from 300 to 850 and is based on a person’s credit history, payment history, outstanding debt, length of credit history, and recent credit behavior. VantageScore ranges from 300 to 850 and is based on a person’s credit history, payment history, credit utilization, and other factors.
Ziprent uses Transunion VantageScore for our credit data.
Background Data and Criminal History
High Accuracy
High Trust
Background checks are an important component of the tenant screening process when evaluating a tenant’s application. This process involves checking the tenant’s criminal and public records to determine their background and assess the potential risk associated with renting to them.
By conducting a background check, landlords can uncover criminal history, including convictions for serious crimes such as theft, fraud, or violence, which may affect the tenant’s ability to rent.
Furthermore, background checks may also provide information about the tenant’s previous evictions, which can give insight into their rental history and ability to maintain a tenancy.
Criminal and eviction history is obtained from CIC and from Pitchpoint. The source aggregates data from court records, which is highly trusted and mapped to the applicant via their name and social security number.
Some jurisdictions, like Alameda county, have banned the use of background checks when screening applications. We use background checks wherever they are allowed.
Conclusion:
Ziprent’s Instant Application processing is a testament to our commitment to providing innovative and effective solutions for homeowners.
By considering this data intelligently and with the homeowner’s best interests in mind, we are able to provide highly accurate information with speed and efficiency, empowering homeowners to make the best decision for their property.
This quick and accurate process allows us to reduce vacancy costs for our owners and provide the owner with a qualified list of candidates to choose from nearly instantly after an application is submitted.
Whether you are a seasoned property owner or just starting out, Ziprent’s Instant Application processing is the solution you need to make the rental process simple, quick, and effective.