How to Do a Background Check on a Tenant

One of the biggest challenges facing landlords and property owners is selecting the right tenant to fill a vacancy. This process can be difficult if you receive many applications and need to navigate certain criteria to make the best choice. Many landlords wonder how to do a background check on a tenant in a responsible, efficient way. 

Fortunately, background checks are a fairly standard process now. There are many resources and services available to help you screen future tenants and spot any red flags. Whether you self-manage or use a property management service, you should always have access to up-to-date information about potential tenants.

In this post, you’ll learn where and how to check a tenant’s background. You’ll discover the specific pieces of information that a background check reveals and how you can use this information to adjust your property management strategy appropriately.

Why Are Background Checks Important?

To initiate any type of background check, you should collect an application from a prospective tenant. An application provides the personal information that you need to conduct a check, and you can often charge a small application fee to cover the associated expenses. By formalizing your initial application process, you ensure that your applicants are serious about pursuing a vacancy. 

Background checks are usually carried out in addition to a full credit report. Using both in combination provides a close look at a tenant’s personal background and financial standing. 

A tenant background check is important to a property owner because it:

• Informs the landlord about what to expect in someone they will interact with over a long period of time
• Helps a landlord verify that an applicant is genuine and willing to take the necessary next steps
• Increases a landlord’s chance at finding a potential tenant who is the best fit for the available property

What will a tenant background check reveal?

Depending on whether you select a background check by itself, or a background check combined with a credit report, you’ll see slightly different information. When it comes to a tenant’s history, these checks will allow you to see:

• Verified personal information, including Social Security Number (SSN)
• History of evictions or foreclosures
• Results from the national sex offender registry
• Results from a national criminal background search
• A global watchlist search, which reveals any international sanctions

How far back does a tenant background check go?

The timeline for background checks depends largely on the company or service provider that conducts them. Some checks may fall within a decade while others extend several decades. You should check with your background check company to confirm the timeline.

According to the Federal Trade Commission (FTC), potential tenants are responsible for providing paperwork or documents that show resolved legal cases. This can help clarify any events that show up on a report, especially if they took place decades ago.

What Should Landlords Look for in a Background Check?

Exact specifications and requirements differ by landlord and by property management company. While the exact numbers or findings could vary, most property owners look at a few important pieces of information to make a decision. While some requirements are flexible, others stand out as red flags for potential problems.

After a property manager or landlord receives the results of a background check, they should scan for the following details:

• Notice of evictions. No matter if an eviction was made as a result of finances or a personal situation, it’s important to note this pattern in a potential renter. While evictions happen for a variety of reasons, if the latest one took place recently, it may be a sign of ongoing problems.

• Income verification. Although there is no set or defined income amount for approval, a landlord has to ensure that a tenant makes enough money to cover the rent and associated utilities. Certain locations have higher costs of living, and this could alter a tenant’s ability to make timely payments. Landlords may also use employment as a way to secure a personal reference.

• Criminal history and prior convictions. Minor traffic violations aside, the property owner often wants to know what kind of criminal activity an applicant has engaged in. It’s important to note that not all criminal records result in a rejection notice. Most property managers take the severity and consequences into account when making a final rental decision. 

What a background check may not show

Even though a background check and credit report can provide a detailed record of a person’s history, it can’t always equip you to make the best possible decision. For instance, a background check can’t always illustrate:

• An individual’s trustworthiness or demeanor. Although it’s great to have a record of criminal history and employment verification, not everyone who has good standing in these areas will be a suitable renter. Some individuals may be difficult to work with in a renting relationship despite having a good job or stable finances. It’s important to have an in-person conversation to check for these interpersonal red flags.

• References. Since a background check pulls data from government and legal records, it doesn’t always provide the reference information needed to vouch for a person personally. During the application process, a property manager may ask for personal or professional references that prove an individual’s character.

Occasionally, an approved tenant and a landlord clash over matters relating to the property, billing, or repairs. If you’re a landlord and want an added layer of protection in these situations, a respectable property management company can help settle disputes. 

Read: How to Evict a Tenant in Arizona – Guide for Landlords

Best Background Check Screening Services

There are several different options for tenant screening services. Some services provide the option to include a credit check, although there may be additional costs. Below are some of the top choices for tenant screening services.

• Rentprep – Rentprep offers fast, easy, and simplified background checks and credit reports for potential tenants. With quick turnaround and helpful customer support, landlords can fulfill more background checks with less stress.

• LeaseRunner – LeaseRunner offers several options for individual property owners, agents, and property managers. Services also include applications, rent collection, listing packages, and more.

• TenantAlert – TenantAlert offers unique options for the responsible party in a background check. Only a small amount of data is needed, and results can come within minutes.

• American Apartment Owners Association – The American Apartment Owners Association offers tiered background check options to help landlords navigate the process based on their unique needs.

Are there any free background check services?

There are several services that offer free background checks for tenants. In some situations, the service is advertised as “free” but is paid for by the tenant, who must then grant access to the results. 

With any no-cost option, you should be sure that the report includes everything you need to make the best rental decision possible. 

Some options include:

• SparkRental
• Experian Tenant Screening
• Vertical Rent

If you use a property management service, your agent or dedicated property manager should be able to advise you on the most effective and economic option. 

Read: Property Management Tools for Landlords

How Property Management Teams Perform Background Checks

Property managers serve as a liaison between an owner and renter and often have the tools needed to navigate difficult personal and legal situations.

If you decide to work with a property management company, a dedicated team of property managers will likely run the background check process on your behalf. These services might include:

• Collecting application information from potential tenants
• Checking or verifying an applicant’s credit history
• Performing an assessment of the tenant’s current income
• Asking relevant move-in questions to determine best fit for a property

The benefit of working with a property management team is that they serve on your behalf. 

As a landlord, you don’t need to worry about interacting with a tenant’s personal information or turning anyone away. If the applicant is not a good fit, the property management team will inform them and move on to another applicant. 

How will tenants know if a landlord runs a credit or background check?

Typically, the application process for an available property or apartment is very transparent. 

There are legal obligations when it comes to informing an applicant of the requirements and results. Additionally, some application fees even include a designated fee for the background check, which alerts the person that it’s part of the standard process.

If a landlord or property manager runs a credit report, this information is typically available through major credit bureaus like Experian and Equifax. Applicants may receive notification that their credit report has been accessed by a third party.

It’s important to remember that potential tenants have certain rights when it comes to the results of their checks. Any applicant who is denied on the basis of background check results must be notified in some way, either in writing or electronically. Moreover, applicants have a right to correct inaccurate information that shows up on reports.

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