How to Run a Background Check on a Tenant in 2022

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Renting your property out to a virtual stranger without knowing anything about them can be chancy. To take the guesswork out of the process, landlords are advised to conduct screening of potential renters

This article will discuss how to run a background check on a tenant. We’ll look at: 

  • the benefits of tenant screening 
  • common questions regarding screening services
  • legalities
  • what to consider before deciding on a lodger

Let’s begin! 

Benefits of Tenant Screening

Doing a background check on a prospective tenant goes a long way toward finding someone who is reliable. So, apart from the obvious, what are the benefits of this process?

  • Avoid Unsuitable Tenants

Once a renter has moved in, getting him to move out again is a tedious process. Therefore, it is imperative to rule out unsuitable applicants. Look for a history of disruptive behavior or criminal offenses. Meeting face-to-face and observing the general demeanor of your application can also help you determine whether the candidate is trustworthy.

  • Find The Cream of the Crop

Normally, property managers can only hope for tenants who meet their specific criteria. Getting each applicant to submit a tenant background check form can help you in this instance. It is particularly useful to highlight renters with good character and comfortable traits such as up-to-date rent payments, little-to-no maintenance demands, and a quiet manner and lifestyle. 

  • Avoid Repeat Offenders – Evictions

An applicant with a history of evictions poses a serious risk to rent security. A comprehensive background report can flag indicators pointing to the likelihood of non-payment of rent and subsequent eviction. Being forewarned can save landowners the expense of costly legal action in this regard. 

DID YOU KNOW: A landlord wishing to evict a tenant has to pay an average of $500 to do so. However, legal fees differ from state to state. Find out all relevant details on evicting tenants here
  • Minimize Tenant Turnover

How long does a background check take for an apartment? Keep in mind that every time a lessee vacates a rental property, the owner is expected to repeat the process of screening potential occupants, repairing breakages, maintaining the facilities, advertising their rent space, and staging the rental. This process leaves a gap in rental income and can be expensive in itself. 

So, renting to minimize tenant turnover is optimal and saves time and money in the long run. 

  • Get Credit Check Backed By Financial Stability

If your prospective tenant flashes cash from the onset, be wary. Include a credit check which supplies information on open lines of credit such as loans and mortgages.

So, what shows up on a background rental check? Foreclosures, bankruptcies, and missed payments are usually included. The presence of these items shows that the rental applicant is hardly financially stable.

  • Spot Criminal Tendencies

Some criminals engage in criminal activities where they live, attempt to hide from probation supervision or run from prosecution. All of this can put your property and you as a landlord in a difficult position. 

Before leasing to an unknown person, do a thorough criminal history check. Reputable tenant screening services scour criminal records together with public records to find out if your applicants have any undesirable backgrounds

  • Perform an Identity Check

Identity fraud happens very often. That’s why it’s a good idea to check Social Security numbers during screening to ensure that your application is indeed who he says he is. Scrutinize possible fraudulent activity linked to the name on the profile.

If you know how to run a credit check on a tenant, perusing education history and an account of previous employment could provide further proof of identity.

Don’t accept pre-printed credit checks, proof of employment, and other documents; it’s always safer to conduct screening yourself, regardless of the higher cost. 

DID YOU KNOW: Identity theft is one of the most prolific white-collar crimes in the US. At least 47% of Americans experienced identity fraud in 2020. Find out more statistics on identity theft here
  • Benefiting The Tenant 

A landlord who screens renters obviously cares about his property and aims to keep it in pristine condition by selecting the right occupants. Thus, the tenant may be assured of a clean, well-looked-after home. If all property owners conduct these screenings, this will help ensure that the neighborhood standards are kept intact.

What shows up on a rental background check that can be beneficial to the prospective tenant as well? In some instances, tenant screening services place the landlord’s character and reputation under scrutiny. In this instance, tenants are protected from scams where fraudsters collect deposits or rent from several different applicants and abscond with their money.

Key Takeaways

Commissioning a tenant screening before signing on a new renter is very important.
A reliable background check sets aside good potential renters from those who are unsuitable.
A background check should include a credit check, eviction history, employment history, criminal records, and instances of bankruptcies and foreclosures.
Always ask for at least three reference letters from previous landlords and follow up on them.
Know your rights and responsibilities as a landlord.

How to Run A Background Check on a Tenant

It is very important to cover all eventualities when undertaking to do a renter background check. A candidate who wants to forego screening or handle screening himself should send up some red flags.

So, stick to the basics: 

1. Understand The Law

Landlord-tenant legislation protects the stakeholders involved in rental agreements. As such certain federal and state laws apply when conducting tenant screening.

  • According to the Fair Housing Act, a property owner cannot use certain information (for example, criminal history) gleaned from a background check to select or refuse a tenant. 
  • The Fair Housing Act similarly protects classes of tenants against discrimination based on color, race, religion, origin, ethnic background, gender, family status, as well as mental or physical ability.
  • Be aware that, even if you know how to do a background check on a tenant, you do not have free rein to use the gathered info as you wish. The Federal Credit Reporting Act (FCRA) protects lessees from unlawful use of information gathered by means of a background check. Access to personal data is only allowed if there’s a permissible purpose for the collection. 
  • The Federal Trade Commission (FTC) looks out for the rights of consumers. As far as renter background checks are concerned, the FTC protects tenants against discrimination issues and ensures that only accurate, fair screening results are made available to property owners.

In addition to understanding how to do a rental background check, it is always good to know what your duties and responsibilities as a property manager are. 

DID YOU KNOW: It is deemed unlawful to decline a rental application based solely on info gathered from a tenant screening. A landlord has to provide the applicant with an adverse action notice, explaining the reasoning behind his decision in detail.

2. Get a Signed Consent

Before a property manager can commence with a background check on his tenant applicant, he has to approach the renter for written consent to go ahead with the screening. Remember to give your reasons for your queries and ask the renter to sign the consent letter.

How extensive are background checks for apartments? Information on the screening reports includes details of financial, employment, and criminal activities pertaining to the applicant.

Therefore, a Credit Report Authorization form completed by the candidate may be regarded as sufficient in this instance. 

3. Interview Applicants

Although one should never base a financial decision on feelings alone, there is some merit to listening to your intuition.

If you are unsure about the type of person you are signing on with, meet your tenant before making up your mind. Observe their manner, try to figure out their ethics, and note how forthcoming they are with personal information. Ask about their reasons for moving, their working hours, and their social habits.

4. Obtain Tenant Information

Once you comprehend how to run a background check on your tenant applicants, ask for a completed rental application form comprising the following:

  • Personal information: name, contact numbers, email address, and emergency contact details
  • Household information: number of possible occupants, pets, and smoker/non-smoker status
  • References: Applicants must provide references and contact info from previous rentals
  • Employment details: they help verify the candidate’s ability to pay rent in the future – ask for the employer’s name, job title, gross income, and supervisor details
  • Background: previous evictions, foreclosures, or bankruptcies
  • Disclosure: include a disclosure to garner permission for a credit check and include information on processing fees and deposits
  • Sign and date the application: include preferred date and term of occupation
DID YOU KNOW: Questions about sexual orientation, ethnicity, and religion are prohibited. Your tenant background check form should also omit these kinds of questions. 

5. Decide Who Pays the Bill

Expenses on any property are comprised of: 

  • electricity
  • gas
  • water
  • services
  • internet or cable
  • general maintenance 

Once you have met with your renter applicant, hash out the details of who will be responsible for which bills. It is customary for the landlord to cover the cost of water and services, but this is not set in stone. Discuss your options and record your preferences to avoid ambiguities in this regard. 

The inclusion of applicable amenity payments in the rent amount is preferable, as a single payment on time is more likely to be honored by tenants. 

6. Choose a Tenant Screening Service

If you are still asking, what does a rental background check consist of, employing a tenant screening service is the best way to proceed. This is a quick, convenient, and more efficient way of processing applications. 

Choose a company with an impeccable reputation for accurate research and reliable accreditation. Of course, affordable fees are a plus too.

All the top screening services have access to libraries of information regarding landlord-tenant partnerships. They are also careful to comply with FCRA and other regulations and offer reliable customer support.

Additional benefits comprise:

  • Comprehensive tenant reports
  • Integration with property management systems
  • Unlimited access to public and federal databases
  • AI-assisted searches
DID YOU KNOW: Tenant screening fees amount to an average of $35 to $75 per person, depending on the amount of information needed. 

7. Decide on Your Criteria

Staying on the right side of rental law and legislation are part and parcel of how to do a background check on a tenant. To ensure this, property managers should create a written rental lease agreement. Outline specific criteria your tenants have to meet in order to be deemed appropriate. 

Include any limits on occupancy, rent due, behavioral policies, restrictions, exceptions, and responsibilities as far as maintenance and upkeep of the property are concerned. 

Conclusion

Conducting a thorough screening of prospective renters is undoubtedly the right thing to do. A comprehensive background report not only roots out those who are likely to cause trouble in the neighborhood, but also identifies the serial rentdefaulters and fraudsters.

Make sure you know how to run a credit check on a tenant, comply with the law, and keep your inquiries non-discriminatory. Knowing where each of you stands will help build a relationship of mutual trust between yourself and your renter.

FAQ

How Long Does A Background Check Take for An Apartment?

A comprehensive background check should take between 48 and 72 hours on average. A credit check by itself takes very little time, while a criminal history screening could take as long as three days.

How Far Back Do Apartments Check Criminal History?

According to the FCRA, background checks cover at least ten years of history. While bad credit stays on your record for 7 years, criminal history will turn up every time a check is done.

How Extensive Are Background Checks for Apartments?

Land managers and screening services in the US know how to run a background check on a tenant by accessing data from the credit bureaus. Information on credit, debt, and repayment history is available. For criminal, employment, and education history, public and government databases are searched.

ABOUT AUTHOR

As challenging as she looks, Kristina loves to question things. Her analytical skills give us a fresh look at markets, products and services and her experience as a real estate agent keeps our related topics up to par.

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