Tenant background Checks: A Comprehensive Guide for Landlords and Tenants

As a landlord, finding the right tenant is essential to the success of your rental business. This is where tenant background checks come in. A tenant background check is a crucial part of the tenant screening process that helps landlords make an informed decision about who they rent to. In this comprehensive guide, we will discuss everything you need to know about tenant background checks and how they can help you find the right tenant for your rental property.

Introduction

A tenant or renter background check is a process that helps landlords screen prospective tenants before they sign a rental agreement. It involves verifying a tenant’s personal, financial, and rental history, as well as checking for criminal records and evictions. The goal is to ensure that the tenant is trustworthy and reliable and that they will pay rent on time, take care of the property, and comply with the terms of the lease.

Landlords and property managers usually used third-party Tenant Screening services to help them complete the tenant screening process. These services utilize state and local public records databases to provide detailed reports on a prospective tenant’s credit, criminal history, eviction history, and rental history.

Steps for Conducting a Tenant Background Check

1. Gather Information: Landlords should request a full name, date of birth, Social Security Number (SSN), and current address from their rental applicants to begin the background check process.  This is usually done by asking the tenant to fill out a rental application. This information will be used to search public records databases like criminal court records, sex offender registries, and eviction records.
2. Run Credit Check: The landlord should also run a credit check on the applicant to determine their financial stability. This includes looking at their payment history, outstanding debts, lien, foreclosure history, bankruptcy filings, etc. The landlord can use online tenant screening companies such as LeasingFlow or TransUnion SmartMove for this purpose.
3. Verify Employment: As part of the screening process, landlords may want to ask for proof of employment from the applicant and contact their employer directly for verification purposes. This step is important to make sure that the applicant is currently employed and has enough income to cover rent payments each month without falling behind on other expenses or bills.

Best Tenant Screening Services 2023

There are several tenant screening services available to landlords, each with its own set of features and pricing. Here are some of the best tenant screening services to consider:

1. Leasing Fow – Leasing FLow has the most affordable tenant screening service on the market which entices more qualified tenants to apply to your property.  It provides landlords with detailed rental applications along with credit, criminal, and eviction reports that are easy to read and access online.
2. RentPrep – RentPrep provides a comprehensive tenant screening report that includes credit, criminal, and eviction history, as well as income and employment verification.
3. MyRental – MyRental provides a range of screening services, including credit and criminal background checks, rental history reports, and employment verification.
4. Cozy – Cozy offers a range of landlord tools, including tenant screening services, online rent payments, and lease management.

What to Look for in the Tenant Background Reports?

When running a background check on a tenant, it’s important to look carefully at the following:

1. Credit History

A credit history is an important part of a tenant background review. Landlords should check the applicant’s credit history and scores to ensure they are financially responsible and capable of paying rent on time. A low credit score could indicate that a tenant has not been able to keep up with payments in the past and could be at risk of defaulting in the future. It is common practice to require applicants to have at least a minimum credit score in order to qualify for the property. Additionally, landlords should look for any unpaid debts or late payments which may indicate financial difficulty for the applicant. Finally, landlords can review public records such as bankruptcies and judgments which can give insight into how well tenants have managed their finances over time.

2. Criminal Record

Criminal record lookup is also essential to a tenant background check. It involves searching for any criminal activity associated with the individual in question, including convictions, arrests, and pending charges. While a minor offense may not disqualify someone from renting, it can be an indicator of the type of tenant they might be. The process typically involves searching public records databases such as those maintained by state or local courts, law enforcement agencies, or correctional facilities.

Many states also have online portals that allow individuals to look up their own criminal records. It’s important to note that some states limit access to criminal records depending on the results of a background check; for example, individuals convicted of certain types of felonies may not be eligible for housing even if they have served their sentence in full. Additionally, some states now require landlords to provide tenants with information about how to obtain a copy of their own criminal record.

3. Rental and Eviction History

Landlords should also look into the applicant’s rental and eviction history for any red flags. Landlords must do their due diligence to ensure that they are renting to someone who will pay rent reliably and has not been evicted in the past. Ask the applicant’s previous landlords questions like how long they lived there and if their rental payments are on time and if they caused any damages or disturbances during their tenancy.

An eviction history check typically involves looking through court records, and tenant databases for any evidence that the potential renter has been involved in a past eviction lawsuit or other disputes related to rental housing. This information can help landlords determine whether the prospective tenant is likely to be an ideal renter or someone who may cause problems in the future. Additionally, some states require landlords to disclose any relevant eviction history information when showing property or signing a lease with a new tenant. Knowing this information can help protect both parties from potential issues down the road.

4. Income Verification

Lastly, verifying the applicant’s income is the most crucial step in the tenant background check. It helps landlords to ensure that the applicant can afford to pay the security deposit and make regular rent payments. It also provides an idea of their financial stability and reliability. Landlords should check the applicant’s most recent pay stubs, tax returns, and bank statements to verify their income. If possible, it’s a good idea to visit the applicant’s workplace while they’re working to make sure that they still hold a job and not just on paper.

Conclusion: Effective Tenant Background Check

Running an effective background check on tenants is an essential part of the rental application process. It helps landlords make informed decisions about potential tenants and reduces the risk of late payments, evictions, and property damage. When conducting a tenant background check, landlords should consider the tenant’s credit, eviction, and criminal history. They should also use reputable tenant screening tools or services to ensure that the screening process is conducted in compliance with fair credit reporting laws.

Finally, requiring references from current and previous landlords and employers can provide additional insight into an applicant’s past performance as a renter. By following these steps, landlords can increase their chances of selecting reliable and responsible tenants who will pay rent on time and maintain the property in good condition.