How to Do a Background Check on a Tenant
Posted by: John Crow
Date: November 06, 2020
Posted by: John Crow
Date: November 06, 2020
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.
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:
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:
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.
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:
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:
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.
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.
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:
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.
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:
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.
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.
Have you caught yourself stressing about the day-to-day responsibilities of managing your property? If so, Century 21 Northwest Realty can help. Our experienced property management team can swoop in and save the day when you’re feeling unsure or overwhelmed.
As industry leaders in the world of property management, we know that you need a team of experts you can trust. Get started today to unlock exclusive benefits and receive personalized service from one of our agents.
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