Screening a tenant begins with determining the criteria and creating a rental application form. The next step is to check the tenant's credit and background records, verify their income, and examine their previous residences.
The right screening process may seem complicated initially, but it helps landlords protect their investments and increase profits. A solid tenant screening process will increase your rental property's profitability and improve your relationship with your tenants.
Occasionally, landlords will provide prospective tenants with their rental criteria checklist upfront. Prospective tenants will then focus their search on other opportunities if they realize that they can't meet your minimum requirements upfront.
It takes several steps for a prospective tenant to become an actual tenant:
- Complete screening by a landlord
- Signing the lease agreement
- First month's rent and security deposit payment
While every landlord wants to find and retain a great tenant, the Fair Housing Act requires landlords to screen applicants carefully, as some information cannot be used in determining who to rent to. Here is how to screen a tenant within the law.
1. Using a Rental Application to Pre-Screen Tenants
The first step to screening prospective tenants is to create a rental application form. In your application, it is important to clarify the rules and what the tenants can expect. If you don't accept applicants with felony backgrounds, let them know you'll conduct a criminal background check.
You may want to include no pets or smoking in your form if you do not allow pets or smoking. The earlier you inform tenants about what to expect, the more time and energy you'll save.
If you have multiple applicants for your rental, make sure they all fill out an application. Also, if there is a cosigner, clearly state they must complete an application. It is essential to return the application to the applicant immediately if any criteria are left blank.
Start your Free Rental Application Form now
2. Verify the Tenant's Credit History and Conduct A Background Check
A credit report and criminal background check are essential when screening for good tenants. These two offer the most reliable way to avoid future problems. Request a credit report from one of the three major credit bureaus:
- TransUnion
- Experian
- Equifax
Alternatively, you can use a FICO (Fair Isaac Corporation) or equivalent score. Pay attention to the following items on the credit reference on a rental application:
- The number and types of credit cards
- Debt income ratio (DTI)
- Delinquent or on-time payments
- Credit maturity
- Student loan debt
- Overall score: An individual with a 700 credit score is likely to be reliable with payments due to their excellent credit history.
Determine the tenant's criminal history by checking both state and federal records. It is important to consider sex offender registers and terrorist watchlists when conducting a criminal background check.
The tenant can show their agreement to undergoing this process by filling out a background check authorization form.
3. Check Tenant Employment and Income History
The applicant's income and employment are crucial because they determine whether they can afford the rent and maintain their employment. Three times is a standard income guideline because applicants who earn three times their rent can usually afford the property without a struggle.
Landlords can verify proof of income through pay stubs, tax returns, and bank statements. Check their employment status and take notes on their performance and history with their current employer if possible. When screening a new tenant, you will discover that job stability can be more accurate than salary alone.
4. Review Previous Addresses, Landlords, and Eviction Histories
Learning about prior rental experiences is essential. Identify a former address and verify it by getting in touch with the previous landlords and asking them specific questions. Most likely, a current or former landlord can offer insight into whether a tenant is easy to work with or should be avoided.
There is also the possibility that the landlord did not follow the state's tenant laws or caused more problems than the tenant did. When possible, you should communicate with multiple landlords when learning how to screen renters.
In addition to the application paperwork, request a landlord reference letter that details the tenant's previous residences, their rent, and whether it was timely paid.
5. Interview the Tenant
Conducting an interview is the next step in the rental application process. Allow the tenant to review any findings and provide explanations for anything derogatory during the interview.
In this interview, you may clarify any potential errors in your conclusions. Never discriminate based on the following:
- Race
- Gender
- Religion
- Disability
- national origin
- familial status
The Fair Housing Act protects applicants against discrimination, which means asking inappropriate questions or turning away a qualified applicant can lead to a potential lawsuit.
Do your research and understand what the Fair Housing Act means for your business, even if you don't believe you're discriminating. Make sure your questions to tenants are consistent.
In some cases, you may have sufficient information to reject the candidate without conducting an interview, and you can proceed to the final step.
6. Reject or Accept the Applicants
A comprehensive tenant screening process should give you plenty of information that you can use to determine whether to accept, deny or if a judgment call is necessary. To make a smart investment decision, you should develop clear screening criteria.
How Much Does it Cost to Screen a Tenant?
According to state laws, tenant screening report fees can range from $25 to $75. A crucial aspect to remember is the accreditation of screening reports by an FCRA-approved credit check service.
A landlord can save money on screening costs by bundling all three reports (credit, eviction, and criminal), an expense that can be covered by either the landlord or the tenant.
Prospective Tenant Criteria
You can streamline the approval process by using your tenant screening checklist for landlords. In addition to protecting you from discrimination claims, it ensures the screening process for all tenants is objective and fair.
How Far Does an Apartment Background Check Go?
Most landlords perform credit checks and background checks, and there is a considerable difference between them because they cover two aspects of the tenant's life.
Credit Check
The regular credit check involves financial information from the past seven years, payment history, debt load, and debt as a percentage of available credit.
Credit inquiries, write-offs, collection accounts, etc., are also considered when calculating a credit score. The average score is 700 or greater, 550-700 is borderline, and less than 550 is considered poor. Neither criminal records nor public court decisions, such as evictions, will be included.
Background Check
You can run a background check for up to ten years in the past. The background check searches public records across the entire USA, including any court judgments examples are:
- DUI
- Evictions
- Criminal Convictions
- Defaulting on a judicial judgment
- Foreclosure
It is within your rights to decline a candidate if there are clear indications that they are problematic. If you are taking adverse action, follow the Fair Credit Reporting Act (FCRA) laws and be prepared to provide supporting documentation when you refuse a prospective tenant.
Helpful Resources:
Table of Contents:
- 1. Using a Rental Application to Pre-Screen Tenants
- 2. Verify the Tenant's Credit History and Conduct A Background Check
- 3. Check Tenant Employment and Income History
- 4. Review Previous Addresses, Landlords, and Eviction Histories
- 5. Interview the Tenant
- 6. Reject or Accept the Applicants
- How Much Does it Cost to Screen a Tenant?
- How Far Does an Apartment Background Check Go?
Table of Contents:
- 1. Using a Rental Application to Pre-Screen Tenants
- 2. Verify the Tenant's Credit History and Conduct A Background Check
- 3. Check Tenant Employment and Income History
- 4. Review Previous Addresses, Landlords, and Eviction Histories
- 5. Interview the Tenant
- 6. Reject or Accept the Applicants
- How Much Does it Cost to Screen a Tenant?
- How Far Does an Apartment Background Check Go?
Screening a tenant begins with determining the criteria and creating a rental application form. The next step is to check the tenant's credit and background records, verify their income, and examine their previous residences.
The right screening process may seem complicated initially, but it helps landlords protect their investments and increase profits. A solid tenant screening process will increase your rental property's profitability and improve your relationship with your tenants.
Occasionally, landlords will provide prospective tenants with their rental criteria checklist upfront. Prospective tenants will then focus their search on other opportunities if they realize that they can't meet your minimum requirements upfront.
It takes several steps for a prospective tenant to become an actual tenant:
- Complete screening by a landlord
- Signing the lease agreement
- First month's rent and security deposit payment
While every landlord wants to find and retain a great tenant, the Fair Housing Act requires landlords to screen applicants carefully, as some information cannot be used in determining who to rent to. Here is how to screen a tenant within the law.
1. Using a Rental Application to Pre-Screen Tenants
The first step to screening prospective tenants is to create a rental application form. In your application, it is important to clarify the rules and what the tenants can expect. If you don't accept applicants with felony backgrounds, let them know you'll conduct a criminal background check.
You may want to include no pets or smoking in your form if you do not allow pets or smoking. The earlier you inform tenants about what to expect, the more time and energy you'll save.
If you have multiple applicants for your rental, make sure they all fill out an application. Also, if there is a cosigner, clearly state they must complete an application. It is essential to return the application to the applicant immediately if any criteria are left blank.
Start your Free Rental Application Form now
2. Verify the Tenant's Credit History and Conduct A Background Check
A credit report and criminal background check are essential when screening for good tenants. These two offer the most reliable way to avoid future problems. Request a credit report from one of the three major credit bureaus:
- TransUnion
- Experian
- Equifax
Alternatively, you can use a FICO (Fair Isaac Corporation) or equivalent score. Pay attention to the following items on the credit reference on a rental application:
- The number and types of credit cards
- Debt income ratio (DTI)
- Delinquent or on-time payments
- Credit maturity
- Student loan debt
- Overall score: An individual with a 700 credit score is likely to be reliable with payments due to their excellent credit history.
Determine the tenant's criminal history by checking both state and federal records. It is important to consider sex offender registers and terrorist watchlists when conducting a criminal background check.
The tenant can show their agreement to undergoing this process by filling out a background check authorization form.
3. Check Tenant Employment and Income History
The applicant's income and employment are crucial because they determine whether they can afford the rent and maintain their employment. Three times is a standard income guideline because applicants who earn three times their rent can usually afford the property without a struggle.
Landlords can verify proof of income through pay stubs, tax returns, and bank statements. Check their employment status and take notes on their performance and history with their current employer if possible. When screening a new tenant, you will discover that job stability can be more accurate than salary alone.
4. Review Previous Addresses, Landlords, and Eviction Histories
Learning about prior rental experiences is essential. Identify a former address and verify it by getting in touch with the previous landlords and asking them specific questions. Most likely, a current or former landlord can offer insight into whether a tenant is easy to work with or should be avoided.
There is also the possibility that the landlord did not follow the state's tenant laws or caused more problems than the tenant did. When possible, you should communicate with multiple landlords when learning how to screen renters.
In addition to the application paperwork, request a landlord reference letter that details the tenant's previous residences, their rent, and whether it was timely paid.
5. Interview the Tenant
Conducting an interview is the next step in the rental application process. Allow the tenant to review any findings and provide explanations for anything derogatory during the interview.
In this interview, you may clarify any potential errors in your conclusions. Never discriminate based on the following:
- Race
- Gender
- Religion
- Disability
- national origin
- familial status
The Fair Housing Act protects applicants against discrimination, which means asking inappropriate questions or turning away a qualified applicant can lead to a potential lawsuit.
Do your research and understand what the Fair Housing Act means for your business, even if you don't believe you're discriminating. Make sure your questions to tenants are consistent.
In some cases, you may have sufficient information to reject the candidate without conducting an interview, and you can proceed to the final step.
6. Reject or Accept the Applicants
A comprehensive tenant screening process should give you plenty of information that you can use to determine whether to accept, deny or if a judgment call is necessary. To make a smart investment decision, you should develop clear screening criteria.
How Much Does it Cost to Screen a Tenant?
According to state laws, tenant screening report fees can range from $25 to $75. A crucial aspect to remember is the accreditation of screening reports by an FCRA-approved credit check service.
A landlord can save money on screening costs by bundling all three reports (credit, eviction, and criminal), an expense that can be covered by either the landlord or the tenant.
Prospective Tenant Criteria
You can streamline the approval process by using your tenant screening checklist for landlords. In addition to protecting you from discrimination claims, it ensures the screening process for all tenants is objective and fair.
How Far Does an Apartment Background Check Go?
Most landlords perform credit checks and background checks, and there is a considerable difference between them because they cover two aspects of the tenant's life.
Credit Check
The regular credit check involves financial information from the past seven years, payment history, debt load, and debt as a percentage of available credit.
Credit inquiries, write-offs, collection accounts, etc., are also considered when calculating a credit score. The average score is 700 or greater, 550-700 is borderline, and less than 550 is considered poor. Neither criminal records nor public court decisions, such as evictions, will be included.
Background Check
You can run a background check for up to ten years in the past. The background check searches public records across the entire USA, including any court judgments examples are:
- DUI
- Evictions
- Criminal Convictions
- Defaulting on a judicial judgment
- Foreclosure
It is within your rights to decline a candidate if there are clear indications that they are problematic. If you are taking adverse action, follow the Fair Credit Reporting Act (FCRA) laws and be prepared to provide supporting documentation when you refuse a prospective tenant.
Helpful Resources:
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