How To Run A Background Check On Renters

Great tenants are essential if you want your rental business to succeed. However, relying solely on a prospect's rental applications could see you overlook important details - which is why a thorough background check is crucial.

This article explores what a background check is, how to run a background check on prospective renters, and what to look for in the report once you have it so you can make the right decision every time.

What is a tenant background check?

A background check enables landlords to gain deeper insight into prospective tenants. This process aids in pinpointing individuals who are dependable, responsible, pay their rent on time, maintain the property, and adhere to the lease terms.

Typically, the best tenant background checks encompass:

1. Credit history: Providing insights into the applicant's financial habits, such as payment track record, outstanding debts, and any history of bankruptcy or foreclosure.
2. Criminal history: Revealing any past criminal convictions or pending charges that may pose a risk to the safety of other tenants or the property itself.
3. Eviction history: Assessing whether the applicant has a prior record of eviction from previous rental properties.

To streamline the process you can use a free property management software like Landlord Studio. 

With Landlord Studio you can create a free rental listing and syndicate it across top channels including Zillow and Zumper, with a single click. Manage leads and applications in one location and run a comprehensive TransUnion SMartMove report for your top applicants - all in one place. Free for landlords.

What does a tenant background check tell you?

Using the three main aspects of the tenant background check outlined above you can form a fairly reliable picture of your prospective tenants and whether they will make a good tenant or not.

But, what does a good tenant look like and how do you use the tenant background check report to assess each tenant prospect?

Credit insights

The credit report will tell you a few things, but mainly whether they are responsible with money. 

• Good payment history: Reviewing an applicant's credit payment history reveals their consistency in meeting deadlines versus occasional missed payments.
• Current credit score: Typically, landlords seek a minimum credit score of 650, though this requirement may vary based on the applicant's overall financial profile. A lower score, if on an upward trend due to timely payments and debt reduction, warrants consideration.
• Credit usage: A high debt-to-income ratio may impact a tenant's ability to afford additional expenses, such as rent.

Eviction report 

Tenants with an eviction on their record may be more likely to go through another eviction in the future. 

However, it’s important that you treat each tenant on a case-by-case basis. Ask them why they were evicted. Speak with their previous landlord to get a full picture and manage this risk effectively.

Criminal background check

As a landlord, you cannot refuse to rent to a tenant just because they have a criminal record, but in most states you can have standardized policies in place to refuse tenants with certain convictions that would put your property or other tenants at risk.

As such, stay mindful of how a prospects record may affect other occupants of the building but don't automatically reject prospects with a criminal history. Instead, talk to the tenant in person to get an understanding of what happened and how it may affect how they behave in the future as a tenant, and how it may impact other renters in the building.

Remember that some states and municipalities do not allow you to use criminal history at all. Additionally, federal law prohibits using arrest records (open criminal cases are considered arrest records) as a basis for a denial.

Related: 8 Methods for Tenants to Show Proof of Income

How to run a tenant background check

Once you’ve got a selection of quality leads through your rental listing system like Landlord Studio, you will want to collect a rental application from the best prospects.

1. Review applications and identify which prospects meet your minimum criteria
2. Choose a tenant screening service. 
3. Obtain written consent - this is done automatically with services like Landlord Studio
4. Run the credit check
5. Review the report
6. Check the references

1. Review application details

To initiate a background check, gather essential details including your applicant's full name, date of birth, address, social security number, and contact information. Utilize platforms like Landlord Studio to request a rental application and get these details.

2. Get Written Consent

Ensure compliance with tenant screening laws by obtaining explicit consent from the applicant before proceeding with background checks. Many screening platforms automatically prompt for authorization as part of the process, meaning if you use a service like Landlord Studio you can skip over this step (it’s built into the flow).

3. Select a Screening Service

Opt for a professional screening service or property management software such as Landlord Studio to handle the screening process efficiently. Landlord Studio’s tenant screening reports cost $40 and fees are charged to the tenant.

When choosing your service you should ensure they use one of the main credit reporting bureaus such as TransUnion or Equifax - this will ensure the data is reliable.

The tenant screening service should offer the following:

• Credit history.
• Rental track record, including eviction history and legal disputes.
• Employment verification.
• Criminal background.
• Registration on sex offender lists.
• Presence on national terrorist watch lists.
• Risk assessment or recommendation based on landlord-defined criteria.

Note: Certain jurisdictions may impose restrictions on the use of specific background check information. For example, in areas like Oakland and Berkeley, California, questioning prospective tenants about arrest or conviction records is prohibited.

4. Request Your Tenants Fill Out The Form

Your tenants will need to fill out the details of the report from their side. This will ensure the accuracy of data and compliance with legal requirements. 

5. Verify References

Make sure to call up and verify prospect's references to ensure that all the details presented are factual and correct.

6. Review the Reports

Once the tenant has filled out the report you can log back into your service, eg. Landlord Studio, to view the report. Reports are generally available to view for up to 30 days. Quickly compare the details of each tenant’s report against your minimum criteria.

If any discrepancies arise, communicate with the applicant to provide them with an opportunity to clarify.

Finally, inform your tenant on your final decision, approve or deny the application.

Note: Be mindful of local regulations governing landlords' use of background check information to ensure compliance with legal requirements.

Related: How To Quickly Create A Landlord Reference Letter

Understanding State-Specific Tenant Screening Law

Tenant screening background checks must adhere to state and local landlord-tenant regulations. 

For example:

• Basing application rejections solely on an applicant's criminal record may constitute discrimination, contravening Fair Housing laws.
• If an applicant fails the background check, landlords are obligated to provide notice, including contact information for the reporting agency. 
• Applicants must be informed of their rights to rectify inaccuracies and obtain a free copy of the report within 60 days of the landlord's decision. 
• In some states, landlords are required to secure written consent before conducting such checks.

Familiarize yourself with the specific laws and regulations applicable in your state, for example, in New York City the fee landlords can charge tenants is limited to $20. 

If in doubt, seek guidance from legal professionals. 

Related: Landlord tenant laws: State by state guides

Final Words: Screening Tenants With Landlord Studio

With Landlord Studio's tenant screening service, finding a suitable tenant for your rental is effortless. The screening process is built into the listings and applications process making it as easy as possible to get and assess high-quality leads. 

Once you’ve got a few likely applications, you can request they fill out a tenant screening report with a click. 

Tenants will receive an email and be asked to fill out and pay for the report. You’ll be notified by email when it’s ready and conveniently access and review all the gathered information from your applications page in the app.

Streamline the entire listing process with rental listings and syndication - and ensure you select the best possible tenant with our built-in tenant screening report.

Plus, Landlord Studio offers a range of powerful features you’ll love, including online rent collection, document storage, property maintenance, lease tracking, and financial tracking tools. All designed for you.

Find and secure great tenants faster than ever. Create your free account today to get started. 

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Tenant background Check FAQs

How long does a background check take to complete?

The duration of a background check can vary depending on factors such as the depth of the check, the efficiency of the screening service, and the responsiveness of the applicant. Typically, once a screening report is submitted by a tenant on Landlord Studio, the report will be delivered to the landlord in as little as 30 minutes.

What if a tenant can’t authorize a background check?

If a tenant is unable to authorize a background check, it may impede the screening process. Landlords can address this by clearly communicating the importance of the background check for the rental application process and providing alternative methods for obtaining consent, such as in-person authorization or electronic signatures.

What background check do most landlords use?

The best background check for landlords depends on individual preferences and legal requirements. However, generally speaking, large credit report bureaus like TransUnion and Equifax provide trustworthy and affordable reports and can be accessed through integrated systems like Landlord Studio property management software. 

Common components of the best background checks for landlords often include credit history, rental history, employment verification, criminal background checks, and eviction history. 

What are considered red flags when screening a tenant?

Several factors can be considered red flags when screening a tenant, including a history of late payments or defaults, frequent moves or evictions, criminal convictions, inadequate income to cover rent, negative references from previous landlords, and inconsistencies in the application information.

Does tenant screening show on credit report?

Tenant screening itself typically does not appear as an inquiry on a credit report. However, if a landlord requests a credit report as part of the screening process, that inquiry may appear on the applicant's credit report.