How to Screen Tenants
CREDIT REPORTS, CRIMINAL BACKGROUND CHECKS, and EVICTION HISTORies
The contrast between good and bad tenants can mean the difference between appreciating a smart investment, or dreading a costly mistake. As complex beings, it’s difficult to boil these judgements down to an exact science. Consolidating information from multiple sources is often the best way to judge whether an applicant will turn into a blessing or a nightmare.
1 - Send A rental application
Sample PDF rental applications are available through many real estate or apartment associations. You can also design your own using your favorite word processing software. Alternatively, use a free online application that does the work for you.
Clearly state that you will be requesting a credit report and background check, and that the applicant is granting permission for you to gather all pertinent financial, employment, and personal information.
Choose application questions that request everything you want to learn about a tenant
This is your first chance to spot the typical warning signs of a bad tenant. Incomplete applications, avoidant behavior, and ambiguous response are typical red flags. You can do this manually, or use an online application that requires certain information.
Clearly state that you will be requesting a credit report and background check, and that the applicant is granting permission for you to gather all pertinent financial, employment, and personal information.
Choose application questions that request everything you want to learn about a tenant
- Employment history, length of current and former employment, frequent job changes?
- Tenant income, salary (Can your tenant afford rent?)
- Bank, credit statements, outstanding debts (Is rent your tenant's biggest priority?)
- Previous address, landlord contact info, cost of rent, reason for move
- Roommates, dependents and pets
- Character references, names, length of friendship, context, contact info
This is your first chance to spot the typical warning signs of a bad tenant. Incomplete applications, avoidant behavior, and ambiguous response are typical red flags. You can do this manually, or use an online application that requires certain information.
2 - Run A Credit Report
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Credit reports are detailed summaries of an individual's financial history, compiled by one of the 3 credit bureaus (Equifax, Experian, or TransUnion). Personal information, lines of credit, bankruptcies, and previous credit inquiries are typically included. Negative information like late/missed payments, accounts referred to collection agencies, unpaid debt, and bankruptcies remain on credit reports for 7-10 years.
Manually enter the personal information collected on your rental application to receive a credit report on your applicant. You can also use an automated site to handle this step quickly and securely.
Components of a Credit Report
Manually enter the personal information collected on your rental application to receive a credit report on your applicant. You can also use an automated site to handle this step quickly and securely.
Components of a Credit Report
- Credit Score - a numerical representation of an applicant’s creditworthiness
- Trade Lines - records of credit activity by an individual, reported to a credit reporting agency.
- Late payments, outstanding debt, bankruptcies and liens.
3 - Run a background check
A criminal background check is a compilation of information from state and municipal databases, as well as national terrorist watch lists. Many providers offer a limited background check that excludes certain states. Read the fine print to make sure you're getting the most complete reports available, or choose a provider with nationwide criminal background reports.
How to read a background report
How to read a background report
- Criminal Records - useful to differentiate between minor mistakes or sustained criminal behavior
- Evictions - the clearest indicator of a bad tenant
- Civil Suits - clues to determine a history of nonpayment or financial issues
4 - Contact Previous Landlords/Employers
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Previous landlord and employment verification calls are one of the more uncomfortable tasks in a well designed tenant screening process. Delving into the character of a tenant or employee can seem invasive. By following a few simple rules, you can gather useful screening information without liability.
Questions for Previous Landlords
Considerations for Employers
Employment verification typically involves requesting a pay stub from applicants, or a personal reference from a supervisor. While employers aren’t required to provide detailed personal information on employees, you’re welcome to ask whether an applicant is currently employed by the company.
You can also automate the whole process and pass the liability off to a trusted verification service.
Questions for Previous Landlords
- Does the tenant have outstanding debt? Late payments?
- Has the tenant damaged property, or behaved disruptively?
- Would you rent to this tenant again?
Considerations for Employers
Employment verification typically involves requesting a pay stub from applicants, or a personal reference from a supervisor. While employers aren’t required to provide detailed personal information on employees, you’re welcome to ask whether an applicant is currently employed by the company.
You can also automate the whole process and pass the liability off to a trusted verification service.
Final Word
The dangers of accepting bad tenants are enough to give anyone nightmares. Adequate tenant screening can save you time, hassle and money. With the proper mindset, a bit of guidance, and the right tools, you can avoid the risks and pitfalls of a faulty screening process.
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