When you’re looking for a new tenant, it’s important to get to know them beyond what they tell you. Even bringing in proof of their current employment, financial situation and more doesn’t mean you shouldn’t do your part to screen applicants.
The rental industry takes this process very seriously, and one of the best ways to complete the picture of who a potential tenant is conducting rental background checks. They help ensure you’re getting a responsible, reliable tenant for your rental property, someone who will not only pay rent on time but will also treat your property right.
What is a rental background check?
A rental background check helps screen potential tenants for your rental properties. It provides you with information that helps show you who this prospective tenant really is. You’ll get access to information like:
- Criminal background check
- Eviction history (if applicable)
- Rental behavior including whether they’ve ever damaged property and if they paid rent on time
Screening reports like this should also be supplemented with additional materials like reference letters from past landlords, current employers and even friends or family.
You’ll also want to make sure you have a rental history for your prospective tenants, which is information they can provide on the rental application.
Is it different than a credit report?
While they’re often grouped together as one chunk in the tenant screening process, a rental background check and a credit report are different.
Credit check reports focus on your credit score, which is generated by a person’s track record of paying bills on time. It’s focused on a person’s financial background and FICO score.
A credit report is a necessary piece to the puzzle in deciding if a person would make a good renter, but it’s only one piece.
The background check flushes out the remaining details about a person’s history, allowing you to learn a little more about their character. Think of it more like a criminal background check.
Having access to past criminal records, eviction records and more can establish whether that particular rental application is worth more attention.
How can I do background checks on tenants?
Although you can decide which applicants you want to get tenant screening reports from, each rental background check must be done in the same way. This ensures you’re in line with local laws and the Fair Housing Act.
You do have a few options though including using a tenant screening service or doing everything yourself. A screening service will most likely pull a credit report and do a full background check for you. It should include criminal reports and credit checks.
Doing things yourself means ordering credit score reports from the three major credit bureaus and running a background check through an online service. You must use an approved consumer reporting agency to get a background check.
Getting permission from the tenant
In order to submit a request for any kind of tenant screening, you first need both their permission and some key pieces of information. These include:
- Applicant’s full name
- Social Security number
- Date of birth
- Copy of their driver’s license
- Contact information
- Banking and credit references (just for the credit check)
The tenant will also need to sign an authorization form giving you permission to run a rental background check. This is in compliance with section 604 of the Fair Credit Reporting Act.
How much do background checks cost?
The cost of a rental background check varies depending on how you choose to do it. The cost can be as low as $20 and get as high as $50, based on what types of reports you’re gathering.
You are legally able to ask potential tenants for an application fee to cover the cost. This fee can also cover any administrative expenses related to processing their application. However, all money must go toward one or both of these things.
You cannot collect an application fee and pocket the cash just because.
What should I look for in a background check?
A rental background check consists of a lot of valuable information you must assess to get a complete picture of what this person is like as a renter.
Make sure you look closely at the tenant’s history. This section should also include an eviction report if the tenant has an eviction record. Seeing something like this usually requires some follow-up with both the tenant and the previous landlord. Sometimes evictions aren’t the tenant’s fault.
Past criminal charges
Also, look closely at the tenant’s criminal background. If they have a history of criminal activity, you’ll want to look at the specific crimes and decide whether they impact their viability as a renter. Something like identity theft or property damage convictions are definitely red flags.
You’ll need their credit history to shed light on their payment history when it comes to bills, loans and even rent. Delinquent payments, or unpaid balances, can show up and impact their overall score.
What to cover that’s not on a rental background check
A tenant-based background check has a lot of information, but it’s not everything. Don’t forget the other highly useful areas to explore in a tenant’s background.
While a rental background check focuses on evictions and criminal history, you should do your own screening to gather employment information.
Not only do you want to confirm where the tenant currently works, but you also want to know about past jobs. Have tenants list this information on their rental application, then it’s up to you to reach out.
Verify employment and salary and get a reference. A good and respectful employee is also usually a good and respectful renter.
Feedback from past landlords
Another area that’s vital for tenant screening is talking with past landlords. Collect an address history on the tenant application that includes contact information for the property manager of past rentals. Reach out to confirm the tenant paid rent on time and left the property in good condition when they moved out.
Do I have to run a background check?
While you don’t have to run a rental background check on every applicant, it’s a good idea to check the criminal history, eviction history and credit reports of any applicant that you’re seriously considering letting live in your rental properties. This will help you avoid any potential problems with them down the road.
Know your prospective tenants
The tenant screening process is a valuable tool that can help you pair the right tenant with the right rental property. Doing a little bit of research upfront and having the right conversations can help you can avoid any potential problems down the road. So, make sure screening reports include a credit report, criminal history, eviction report and plenty of references. To make sure this prospective tenant can pay rent on time, this is the best place to start.