As the owner of a rental house or apartment complex, you want to ensure that the people leasing from you will pay rent on time and take care of the property. A background check on potential tenants is one way to avoid late payments and prevent damage to your property.
Screening potential renters properly is one of the most important things a landlord can do before renting their space to someone.
What is a Tenant Background Check?
One of the most common problems that landlords have is when tenants don’t pay their rent. A tenant background check can indicate whether a potential renter will pay their rent and if they will be a good tenant. A tenant background check verifies a potential tenant’s identity and confirms certain details about them. Rental applications should ask for the tenant’s full legal name, address, and identifying information like Social Security Number so that a background check can be conducted.
Types of Tenant Background Checks
There are a few types of background checks, three of which are useful to owners of apartment complexes and rental houses.
A criminal background check determines whether or not a person has had any criminal activity in their past. Those who have a history of trespassing, drug trafficking, theft, or sexual assault may not be the best candidates to live in your building. Renting to someone with a criminal background may jeopardize the other tenants’ safety or belongings.
Credit background checks are very important for landlords to determine a tenant’s ability to make their rent on time. A credit report can assist in getting this information. A tenant credit check will ensure that the future tenant is in good financial standing and will be able to pay the rent. Landlords can use the information in the credit report to make an informed decision about whether or not to rent to a tenant. For either type of background check, the potential tenant must give permission.
Internet and Social Media Searches
Some landlords use Internet and social media searches as part of their screening process. In a world where just about everything is online, a landlord can learn a lot about a tenant from conducting online or social media searches. While it is completely legal for landlords and property management companies to do so, it should be used as a method of screening with caution because there may be information that is untrue. You have to be aware of the legalities of screening and fair housing laws.
What to Look Out For in a Tenant Background Check
Once you do a background check on a potential tenant, you need to know what to look for to increase the chances that you want to rent to them. There could be a few red flags that indicate that the renter might not make the best tenant. Look at the following factors:
- Credit Score: The credit check will give you a credit score. Most credit scores are in the range of 650-700. Higher scores mean better credit decisions and show confidence that debts will be repaid. Lower scores may be an indicator that the tenant will have trouble making rent payments on time.
- Credit History: The credit check will also provide the potential renter’s past financial decisions. This tells the landlord about what kind of debt the tenant has. If the renter has filed for bankruptcy, it will be on the credit report for 7-10 years, depending on the type.
- Criminal History: Landlords need to be careful here as the Fair Housing Act does provide a protected class for criminals. As a landlord, you are not allowed to consider arrests that do not result in convictions. Landlords should be consistent in having a fair process that complies with federal, state, and local laws. The way criminal records can be considered is continually changing.
- Rental History: A comprehensive background check will follow up with the previous landlord to find out why the tenant moved out and if they paid on time and maintained the property. Information from prior landlords can be a great resource as part of the tenant screening process.
- Eviction History: A rental history report will show if a tenant has been previously evicted from a property. An applicant with a prior eviction is four times more likely to have another eviction so the chances are good that if a renter has been evicted before, it could happen again. Eviction history is one of the most telling items on a tenant background report.
Using a tenant background check in the screening process will help increase the chances that you choose a tenant who will pay the rent every month and take care of their rental space.