How to Do a Background Check on a Potential Tenant
Checking into a potential tenant’s background is a stock standard safety precaution performed by landlords or property management services to reduce tenant turnover and potential liabilities. It’s the most direct way to identify red flags and avoid problematic court cases. While time-consuming, a thorough background screening will ensure you select suitable tenants for your rental property. Here’s a quick guide that covers how to check my tenant background.
Getting Information From a Potential Tenant
How do you do a background check on a prospective tenant? The first step entails gathering and analyzing tenant data to vet the good applicants from the bad.
Completing the Rental Application
Online rental applications will furnish you with all the necessary information to conduct a tenant background check and disqualify any applicants who don’t satisfy your criteria. If the application is online, prospective renters can easily apply, and you’ll waste less time reviewing information. A decent application should ask for the following:
- The applicant’s full name, social security number, date of birth, contact information, and driver’s license copies.
- Current and previous addresses, dates of residence, and references of previous or current landlords.
- Current income, dates of current and past employment, names, and contact details of current employers.
- Banking and credit references to conduct credit checks
- Contact information for personal (character) references
Filling Out the Credit Report Authorization Form
The Fair Credit Reporting Act (FCRA) requires landlords to request a tenant’s permission to perform a credit check. FCRA compliance entails completing a credit card report authorization form before obtaining an applicant’s credit report. According to law, if a potential tenant refuses to sign a credit authorization form and/or doesn’t allow you to perform a credit check, it is within your right to deny them the ability to lease your property.
Loads of potential tenants look good on paper, but interviewing applicants in person is highly recommended, so you can get a feel for what they are like, and pick up on subtleties you can’t read between the lines. Wondering how to check a tenant’s background during an interview? Ask the following:
- What is their reason for moving?
- Do they have any pets, and are they housebroken?
- Do they smoke?
- Will anyone else be living with them now or in the future?
- Do they have friends or relatives who stay over? How long and how frequently?
- What is their typical workday like? Do they work nights?
- Are they able to pay the first month’s rent and security deposit before moving in?
- Ideally, how long do they intend to stay?
- Have you ever broken a rental agreement, and if so, why?
- Have they ever been evicted?
As professional property managers, we know exactly how to do a background check for tenants, and recommend following the steps below.
The aim of obtaining a potential tenant's credit report is to assess their financial viability. Credit reports reveal unlawful evictions and lawsuits, bankruptcies, and foreclosures. Credit companies provide credit scores, of which the typical score required for renting is over 620. By assessing credit history, you can identify how much a risk a tenant poses.
You can acquire a credit report from major credit reporting bureaus like TransUnion, Experian, and Equifax after opening an account and following their online instructions. If you deny an applicant due to their negative credit score, you have to send them an “adverse action” letter.
This letter informs them why they were rejected, the name and agency that reported negative information, and their right to obtain a free copy of their credit report if they request it from the agency within 60 days of receiving the letter.
Use Verified Tenant Screening Company Services
Smart landlords play defense by using a professional tenant screening service to screen applications. They perform a background check as part of your tenant screening. Most tenant screening companies develop packages for their clients, depending on the data they require. Clients frequently ask, “how do I run a background check on a tenant?”
Truthfully, hiring someone to do it for you is the easiest way. When hiring a tenant screening company, be sure to look for a high accuracy rate, whether they offer a reputable credit report, criminal background check, sex offender registry, and eviction history check, as well as using top security measures.
You’ll want to develop a strategy before hiring screening company services that cover the following:
1. A Payment Plan
A background check can range anywhere between $40 and $500. You’ll need to decide whether the price is integrated into a rental application cost or if you’re going to foot the bill. Bear in mind; sometimes property managers want to make their offer more compelling and don’t require tenants to pay for screenings. However, this increases the risk of losing good tenants if you are dead set on saving a few bucks.
2. Know How to Use The Information
If you’re a fair landlord, you’ll want to hold all potential applicants to the same standard. To do so, you have to establish your non-negotiables. For example, do you consider teenage misdemeanors to be a deal-breaker? Will you reject all criminals with minor misdemeanors or just felonies? You must be clear about these boundaries and the law to ensure you don’t face unfair discrimination charges.
3. Understand The Law
To extrapolate on the previous point, the Fair Housing Act provides a clear outline of what you can and cannot do as a landlord. For example, you may not reject anyone because of their race, gender, religion, disability, or sexual orientation. According to the act, “individuals who believe they have been victims of an illegal housing practice, may file a complaint with the Department of Housing and Urban Development (HUD) or file their own lawsuit in federal or state court.”
Talk to Previous Landlords
Talking to previous landlords lets you verify a prospective tenant’s interview answers. You should find out how long they rented the property, whether they paid on time if they caused any property damage, and if the neighbors ever complained. It’s always good to ask if they’d rent to the tenant again, as this will help you ascertain more about the person’s character.
Contact the Employer
Reaching out to a potential tenant’s employer is like a two-step authentication to verify employment and income information. Gathering information about their employment status, like whether they earn a fixed salary, their current wage, and how they’ve been employed, allows you to fully understand their financial picture.
Check Personal Recommendations
Even though friends and family hold bias towards an applicant, they should be able to provide robust character references like whether an applicant is reliable, amenable, and won’t cause any trouble. You may wish to ask the following about the applicant:
- What is their general demeanor like?
- How would they describe the state of their old apartment?
- Do they think they make a good tenant?
Now that you know how to do a criminal background check on a tenant or even how to do a general background check on a tenant, you’re equipped to start the process and ensure it’s properly done. However, if you’d prefer to outsource your property management to a third party, then consider using the property management services from 33 Realty. Contact us today to find out more about how we manage tenants and resolve common rental issues, including difficult tenants.