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New tool lets landlords ‘bank check’ prospective tenants
Landlords typically rely on credit checks to scrutinize prospective tenants, but it’s a method replete with blind spots. Fortunately, a potentially better way of determining renter suitability has come to market.
“We offer credit check but our primary verification method for applications, which we provide to landlords, is a turnkey pre-screening with our bank check, and what it does is instantly verify the income and expense profile of our tenant applicant today and in the past year, so we can prove to the landlord what their payroll transactions are and what their payroll amount is every month,” Craig Schoen, CTO and co-founder of Rentify, a platform that launched in September, told CREW.
“We show their average bank balance every month, and those are critical numbers because landlords have never had access to this. Even if someone gave their paper bank statements, it would take time to verify and now we do it all in minutes, so landlords understand where applicants stand in the process.”
In addition to credit checks, landlords usually collect documents like paystubs and T4s manually, and a lot of back and forth emailing occurs throughout the process. But even that isn’t enough, according to Jamie Troke, president of Ekort Property Management in Belleville, ON, who says credit checks don’t provide real time analysis of spending habits and financial responsibility.
“It doesn’t verify that you work at Tim Hortons or that you have $1,200 in your bank account,” he said. “It just validates that you may pay your phone bill on time. What you get through a credit check is so minimal that it isn’t a reliable reflection of a tenant’s ability to pay their rent and of their habits.”
Perhaps the biggest reason credit checks aren’t reliable for landlords is that they’re not designed for them.
“What we found is credit checks are built for the lending industry to identify credit risk, but there’s a large departure. What landlords, small, medium or property managers, actually need to know comes from the bank account,” he said. “We focus on facts and look at where the prospect is today and where they’ve been in the past. If they say they’ve paid rent before but nothing in our analysis of bank accounts shows that, we highlight it to the landlord, which allows them to ask the right questions and gives them a stronger foundation than using unverifiable discussions with other landlords.”