After a potential tenant has found a rental online and filled out a rental application form, the landlord should conduct a thorough tenant background check. Though a background check for renters is not a required step, it’s highly recommended. Landlords can be sure that they’re protecting not only themselves, but the neighborhood as well by thoroughly screening tenants for credit and criminal history.
What Is a Tenant Background Check?
A tenant background check is a screening tool landlords can use to gain in-depth insight into a tenant’s past to ensure they’ll be reliable renters. Tenant background checks pull information from government databases and credit bureaus concerning the tenant’s credit score and criminal history. This information is presented to the landlord in a detailed report.
How Does a Tenant Background Check Work?
After a tenant has filled out the rental application form with all of their personal information, landlords can request applicants to authorize and pay for a tenant credit and background check. Using information from the rental application, such as date of birth, social security number and former addresses, background check services can gather the necessary details for a landlord to make an informed decision.
A background check for renters typically pulls credit information from three major U.S. credit bureaus: Experian, Equifax and TransUnion. The applicant’s personal information is checked against a wide variety of federal and state criminal databases.
All of this data is then compiled into a tenant background check report for the landlord to analyze. There are many benefits to landlords requiring a rental background check, and the four main reasons are detailed below.
1. Identify Any Major Red Flags
The most obvious reason for landlords to conduct tenant background checks is to reveal any major red flags that would indicate the applicant is not a desirable tenant. Though most rental application templates contain sections for the applicants to disclose any criminal history, many applicants may not be completely honest. A background check for renters helps verify the claims the applicant made on their rental application and ensures the landlord is aware of any criminal or credit histories they may not have disclosed.
2. Protect Landlord From Rejection Lawsuits
Under the Fair Housing Act (FHA), landlords may not refuse housing to anyone due to discrimination against gender, age, ethnicity, orientation or any number of other demographics. Landlords may also not deny housing due to criminal history unless they are concerned about the safety of the property and/or the surrounding community. Therefore, it’s important for landlords to obtain all of the critical information surrounding a tenant up front. If a potential tenant threatens a lawsuit due to discrimination under FHA, the landlord can present the tenant background check as proof of reasonable concern.
3. Ensure the Community is Safe
This issue can go the other way as well. If a landlord decides to forego a tenant background check, they may miss important information that could affect other tenants down the road. For example, if an applicant has a history of illegal drug use, they may continue in the rental and endanger other residents.
Ignorance is no excuse for a landlord in this situation, and they may end up facing lawsuits from other tenants for failing to ensure their safety. Major issues with a tenant could even spread to the community outside of the rentals, resulting in angry neighbors and calls to local police.
4. Find Long-Lasting Tenants
One of the biggest issues landlords deal with is high tenant turnover, as finding qualified new tenants every six months to a year is a lot of work. By utilizing tenant background checks, landlords can find tenants who are best suited to their rentals and will be happy living there for years to come. Reducing tenant turnover saves a lot of time, money and effort for landlords.
Analyzing Tenant Background Checks
Once you’ve received the completed credit check, you need to analyze both the credit and criminal history findings in order to decide if you want to move forward with the applicant.
What Is Good Credit for Tenants?
In addition to credit score, many background check services will also weigh an applicant’s payment history. This is because on-time payments are more important to landlords than credit scores, though credit scores are a good overall indicator of financial health. In general, landlords should look for tenants with at least an average credit score of 650. Though good credit is considered 700–749, most renters will have lower-than-average credit scores as they don’t have mortgage payments to boost their score. In addition, landlords should look for applicants with a near-flawless history of on-time payments.
What If My Applicant Has a Criminal History?
As mentioned above, landlords can deny housing to those with a criminal history if they believe the applicant will put the community at risk. However, just because someone has a felony and/or jail time on their record does not necessarily mean they will be a bad tenant. This is a judgment call that is up to the landlord’s discretion, and some factors you should consider are:
- How long ago was the offense?
- Was the applicant very young?
- Do they have a history of criminal activity or was it a one-time occurrence?
- What was the nature of the crime? Was it violent or non-violent?
Where Can I Find a Credit Check for Landlords?
Most tenant credit and background check services can be found online. TurboTenant partners with TransUnion in order to provide accurate and thorough reports for our landlords. These are also free of cost, as most landlords choose to have applicants pay for the tenant background checks.
Tenant background checks are essential in giving landlords all the information they need to know up front. After all, tenants are an investment and landlords need to know enough in order to make an informed decision. Otherwise, they could end up dealing with an eviction or lawsuit.
DISCLAIMER: TurboTenant, Inc. does not provide legal advice. This material has been prepared for informational purposes only. All users are advised to check all applicable local, state and federal laws and consult legal counsel should questions arise.