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As a landlord, ensuring the quality and reliability of your tenants is crucial for the smooth operation and success of your rental business. That’s why it’s important to know how to do a background check on a prospective tenant to get a better understanding of their suitability as a tenant.
In this article, we share what a background check is, how to properly conduct a tenant background check, and answer some common questions related to the process.
What Is a Tenant Background Check?
A tenant background check is a screening report that shows specific details about a potential applicant such as their financial, criminal, and eviction history.
Tenant background checks typically include the following:
- Credit history: A credit report provides insights into an applicant’s financial responsibility, including their payment history, outstanding debts, and any bankruptcies or foreclosures.
- Criminal history: A background check may reveal any criminal convictions or pending charges that could pose a risk to the safety and well-being of other tenants or the property itself.
- Eviction history: This component helps determine if the applicant has a track record of being evicted from previous rental properties.
You can use a property management platform to request these reports from applicants, which can help streamline the process since most platforms also request written authorization.
How to Run a Background Check
Here are the necessary steps for performing a tenant background check.
1. Collect a Tenant’s Information
You’ll need specific details from the tenant to run a background check, such as their name, date of birth, address, social security number, and contact information. To do this, you can request a rental application to collect this information from them online.
2. Obtain Written Consent
Most states can tenant screening laws in place that make it illegal to request screening reports from applicants without their knowledge or limit which reports you can request. For that reason, it’s important to refer to local landlord-tenant laws before moving forward with the process.
The good thing is most screening platforms automatically require authorization before an application moves forward, removing the responsibility from you. You can also request individual reports (if not all types are allowed) or bundle them together for a one-time fee with Avail.
3. Review the Reports
After completing a background check, you can view the reports to approve or deny their application. If you find an item on their report, it’s best to talk to the applicant about it to give them a fair chance. Certain states also have limitations on landlords’ use of information on certain reports, so refer to local ordinances.
How Long Do Background Checks Take to Complete?
The length of time it takes to complete a background check depends on the service you use, and the responsiveness of the tenant.
With Avail, your prospective tenant will be asked to authorize their background check with step-by-step instructions. Once authorized, you’ll have the reports ready to view from your landlord profile in a matter of minutes.
What If a Tenant Can’t Authorize a Background Check?
In most states, a tenant needs a social security number or individual taxpayer identification number to authorize background checks. If your tenant doesn’t have either (this is common with international tenants), you may need to consider alternative options like a credit reference, landlord reference, or a bank statement.
Are There Laws on Background Checks?
Background checks performed during the tenant screening process are subject to state and local landlord-tenant laws. In most states, landlords must obtain written consent before performing a background check on a tenant.
States may have additional requirements, so be sure to review the laws and mandates in your state, and consult with a legal professional for additional assistance.
Screen Prospective Tenants With Avail
With a tenant screening service like Avail, you can find a qualified tenant for your rental with ease. Request a digital application, have your applicants authorize background checks online, and review all the information conveniently from your landlord dashboard.
Create an account or log in today to get started. And for more resources to help you find the best tenants for your rental, be sure to visit our tenant screening toolkit page.
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When becoming a landlord, you’ll want to find reliable tenants that will take care of your property and pay rent on time each month. While you can always filter through applicants with a rental application, adding a rental background check to your application process can help you get an even more comprehensive overview of all your applicants.
To guide you through the tenant screening process, we outlined what a rental background check consists of and how to request a background check on Avail.
What Is a Rental Background Check?
A rental background check is when a landlord or property management company checks a tenant’s credit, rental, eviction, and criminal history to determine if they’re the right fit for the rental property.
Cities and states vary in just how extensive the tenant screening process can be, with some restricting the information you can ask in a background check and others prohibiting the criminal background check altogether. It’s also important to note that the rental background check you conduct must be uniform across all applicants to avoid violating any Fair Housing laws or discriminating against a tenant based on their race, sex, nationality, and more.
If you come across an applicant who has previously been evicted or has a criminal history, it’s advised that you take circumstances into account and give them the chance to explain their situation further in order to fairly screen all potential tenants. Failing to do so could land you in legal trouble depending on your local fair housing ordinances, HUD guidelines, and landlord-tenant laws.
What Does a Rental Background Check Consist Of?
A rental background check shares information on who an applicant is, how they handle their finances, and what properties they previously resided in. With Avail, a rental background check typically includes the following three main reports: a credit, criminal, and eviction history report.
- A credit report: Landlords can request a credit report from TransUnion to view the applicant’s credit score, credit utilization, payment history, and account summaries.
- A criminal history report: This report allows you to see any past criminal reports attached to the applicant, including descriptions of the crime and if it was a felony or misdemeanor.
- An eviction report: See if a tenant was previously evicted, along with a description of the incident so you can better understand their rental history.
Tenants will need to authorize any background checks before they are conducted, as each report contains sensitive and personal information. Landlords can either run their own rental background checks or accept a tenant’s renter profile if they’ve already created one with Avail. Both options will ensure you receive accurate and up-to-date information on an applicant so you can find your next tenant.
How to Request a Background Check on Avail
Avail makes the tenant screening process easier and less stressful for both tenants and landlords. Here’s how to request a background check through your Avail landlord account.
- Log in to your account: You’ll first need to set up your rental properties to screen applicants on Avail.
- Navigate to the unit your applicant is interested in: This step is important for landlords with more than one property in their portfolio.
- Click “Applications”: Under the Applications tab, click on “Edit” to go to the application’s default settings. You can tailor your rental application to include personalized questions, require additional reporting, and more.
- Add your preferred screening reports: Here you can add a credit report, a criminal background report, and an eviction report, the cost of which your applicant is usually expected to cover.
- Access the results through your dashboard: Once the applicant has authorized the tenant screening reports, you’ll be able to access the reports through your dashboard in minutes.
How Long Does a Background Check Take for an Apartment?
A rental background check can take a few hours to a few days depending on how quickly an applicant provides authorization. If a tenant provides a renter profile during the application process, then this can expedite the process since you’ll already have access to their credit, criminal, and eviction history reports on hand.
Screen Your Tenants With Avail
Finding the perfect tenant for your rental property begins with having an accurate, easy, and fast tenant screening process. While you can always handle this part of the rental stage yourself, property management software platforms like Avail allow you to streamline the process and abide by local ordinances to avoid discriminating against any applicant. Get started in minutes by creating an account on Avail to manage your rental properties today.
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Background checks are one of the most important parts of tenant screening, which is the process that helps you answer this main question: Who should you choose to live in your rental property?
While tenant background checks provide many benefits, certain cities don’t allow landlords to include them during the tenant screening process. However, if your local laws do allow for tenant background checks, it’s advised to include them during the tenant screening process to find quality tenants. Here are three reasons you might require them in your screening process.
1. Safety Precautions
When you’re considering who to rent to, you should think of it as who you are allowing in your building and your community. It is your responsibility to your community to choose tenants who won’t put anyone at risk.
While simply having a criminal history is not a valid reason to deny a tenant, landlords should assess each criminal history on a case-by-case basis and make sure that a particular tenant will not pose problems to other tenants, the property, or the landlord.
2. Liability Protection
By requiring a tenant background check, you are setting yourself up to know as much valuable information as possible. It’s important to note that if you skip a tenant background check, you may be liable if something goes wrong since you can be sued for negligence.
Furthermore, your reason for accepting or denying an applicant is important. According to Fair Housing laws, you cannot deny an applicant based on discriminatory factors like familial status, sex, disability, religion, color, race, or national origin.
You are allowed to deny an applicant based on criminal history, but you have to prove that your decision is meant to preserve the safety of your property and your community. You cannot use criminal history to deny an applicant as a cover-up for discriminatory reasons. It has to be clear that you are rejecting him or her because of a presumed, reasonable risk based on your screening criteria that you have applied to all other prospective tenants.
3. Reduce Tenant Turnover
By requiring a tenant background check, you are conveying to prospective tenants that you have a rigorous tenant screening process. This helps attract tenants who will put in the effort to meet your criteria, and are hopefully more likely to stay long-term or renew their lease, saving you time and money because you won’t have to look for a new tenant right away.
How Do Tenant Background Checks Work?
Avail has partnered with TransUnion to provide comprehensive background check information to DIY landlords across the country. After a tenant authorizes a background check, TransUnion scans various databases for connections between identity information and a criminal record. Criminal history searches are typically done with identity criteria like name, date of birth, and address.
Criminal courts typically don’t include social security numbers (SSNs) on criminal records because criminal reports are public information and they want to reduce identity theft. For this reason, SSNs are typically not used for the database scan.
However, background checks still require an SSN in order to verify identity by matching an applicant’s name to their SSN. Adding more criteria (like middle names) also helps enrich the search of public records because it means the inquiry has a wider net.
In order to start a criminal background check, you’ll need the applicant’s approval of a criminal background check and the applicant’s name, date of birth, address, and SSN.
This information can be easily and securely gathered if you use our tenant background check at Avail. You send a request to your prospective tenant to authorize the credit and background check. Once the tenant has authorized it, they securely input their SSN. You never see the SSN, which reduces your liability and provides comfort for the tenant.
With the help of TransUnion, our reports instantly pull data from the following sources:
- Felonies and misdemeanors from state and local jurisdictions
- Sex offender public registries from all 50 states
- Federal data including:
- Drug Enforcement Administration
- FBI’s Most Wanted
- Homeland Security
- U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Most Wanted
- U.S. Marshals Service Most Wanted
- U.S. Secret Service Most Wanted Fugitives
- U.S. Treasury Office of Foreign Assets Control (OFAC)
That’s data from almost 700 sources of criminal, sex offender, and eviction records with nearly 300 million criminal records.
Analyzing Tenant Background Checks
As a landlord, you should be concerned about violent crimes, assault, theft, trespassing, vandalism, arson, possession of an unauthorized weapon, etc. Examples of crimes that may not be as relevant are speeding tickets and underage alcohol consumption.
There are sometimes legal restrictions placed on individuals who have committed crimes. For instance, some sex offenders cannot come close to schools or parks. If your prospective tenant is a registered sex offender, you should find out if they are under court restrictions or probation and consider your property location in relation to nearby schools and parks.
Some landlords have their prospective tenant explain his or her criminal history. According to SmartMove’s poll in 2016 (shown below), 34% of landlords will overlook a relevant criminal history issue if the tenant has an explanation.
Keep in mind that as you assess potential tenants with a criminal background, you must have standardized screening criteria in place that you apply to all tenants. Learn more about how to evaluate a potential tenant’s criminal background check and avoid any legal trouble.
Why Should You Care About Tenant Background Checks
60% of landlords believe that background checks are more important than credit checks. After all, background checks are a safety measure, while credit reports are a measure of financial responsibility. However, both are important, and neither should be skipped when possible.
A solid screening process, which includes a tenant background check, is a critical part of being a successful landlord. To incur the lowest legal risk possible and have the fewest tenant-related issues, create a free Avail account now to start screening your tenants today. If you already have a prospective tenant and want to pull a background check, use our straightforward and easy-to-interpret criminal history reports.
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As a landlord, choosing the right tenant is the most important thing that you will do. Picking responsible tenants helps ensure (but doesn’t guarantee) that your tenants will pay rent on time and take care of your investment property. Ask any landlord who has experienced renting to awful tenants — they likely didn’t properly screen the individuals before signing the lease.
Our tenant screening checklist covers all the steps in a good screening process, including a key part of the application process: obtaining and analyzing the tenant’s credit report.
We’ll help you understand how to read and interpret a tenant’s credit report so that you can use it to make an informed choice when selecting tenants.
What Is a Tenant Credit Report?
A tenant credit report shows important financial information and can help a landlord understand how a tenant has historically handled their finances and credit accounts.
Through Avail, landlords can request TransUnion credit reports from prospective tenants. These reports show a tenant’s credit score, as well as an individual’s detailed payment history for things like credit cards, auto loans, student loans, and mortgages.
Why Do Landlords Require Tenant Credit Checks?
Landlords require credit reports from tenants because it helps them see all of the other monthly payments the tenant is responsible for during the lease. When you rent your property to an individual, you are becoming a creditor — not dissimilar to making a loan to the individual. For the duration of the lease, the renter will owe you a monthly rent payment.
If a renter’s other monthly obligations plus the rent amount (due to you) exceed the tenant’s income, there’s a chance the tenant may not be able to afford the rent. On the other hand, if the tenant’s monthly payments plus rent are a low percentage of their income, then you can have greater comfort in the tenant’s future ability to make payments.
Additionally, credit reports give landlords an unedited view of how tenants have handled their financial obligations in the past. An individual’s past payment history is an excellent indicator of how they will handle payments in the future.
How to Read a Tenant’s Credit Report
Now that we understand what the credit report is and why it’s important, let’s examine the two main components: the credit score and the payment history section.
1. The Credit Score
The credit score that we provide for our landlords comes directly from TransUnion and is based on a proprietary algorithm developed by the credit bureau. The score exists on a scale of 300 (lowest) up to 850 (highest possible score), and is meant to be a single number that summarizes an individual’s credit history.
Unfortunately, the formula for determining the credit score is kept as secret as the special formula for Coca-Cola. While the calculation itself is not shared publicly, everyone agrees that the more financially responsible an individual is, the higher their score will be.
Many landlords put too much emphasis on the credit score alone. It’s easy to understand why — the credit score is a number, and it’s easy to look at our chart to understand where a number falls on the spectrum.
However, the next section of the credit report contains the majority of the useful information. It is more subjective and requires some judgment calls, but this extra effort will pay off when you have great tenants who always pay rent on time.
2. The Detailed Credit History
The second section of the credit report, the detailed credit history, is the most valuable part of the report for landlords when evaluating prospective tenants. This section of the report allows you to do two things: First, you will be able to understand what other monthly payments the tenant is obligated to pay, and second, you will get an idea of the tenant’s full payment history.
When considering whether to rent to someone, the most important question to ask yourself is whether the person is capable of paying the rent every month. An individual’s income is an important part of this equation, but equally important is how much money the individual is obligated to pay for auto payments, student loans, credit cards, etc.
Within the credit report, there will be a separate block of information for each of the tenant’s financial obligations. Within this block will be a line item that shows monthly payment. On a piece of scratch paper (or in your head), we recommend tallying up these monthly obligations, adding the rent amount, and comparing the total to the individual’s income.
3. The Payment History
Your next mission in analyzing a tenant’s credit report is understanding their payment history and whether they frequently pay bills on time. When you pull a tenant credit report through Avail, we make it easy to view this information by giving you a colored month-by-month breakdown of a tenant’s payment history. Months shaded green were paid on-time, yellow implies that the payment was late, and red means that the payment was never made.
You should be looking for long stretches of payments that have been paid on time. This can give you comfort, but not guarantee, that an individual is likely to pay rent on time every month.
It’s worth noting that rent payments are not typically reported to the credit bureaus, so the tenant’s history of paying rent will generally not appear on the credit report. However, Avail helps tenants build their credit with each on-time rent payment they make. This way, tenants get something in return for their sizable monthly payments, and they’re incentivized to pay on time each month.
How to Interpret Your Tenant’s Credit Report Information
When interpreting a tenant’s credit report, we suggest thinking about the potential outcomes like a stoplight.
- Green: Certain credit reports will be so good (high credit score, good payment history, etc.) that you can feel pretty confident about the tenant’s likelihood of paying rent on time and you can proceed to the next steps of the screening process.
- Yellow: In the middle, or the yellow part of the stoplight, are the tenants who could still be worth renting to, but require some additional questioning to understand the specifics of their credit report. For example, a tenant may have lost their job during a recession or pandemic and was unable to pay their bills.
- Red: Finally, tenants with poor credit in the red section of the stoplight may give you pause. In these cases, it’s legal to deny a tenant based on their credit report or lack of sufficient income. Still, it’s important to note that a credit report doesn’t paint the whole picture, and in some instances, it may be worth additional questioning or offering them alternative ways to show financial responsibility.
How Do You Set Credit Report Screening Standards?
It is important to emphasize that while the credit report contains a lot of useful, detailed information, you ultimately have to determine what standards must be met in order for a tenant to rent your property.
The standards you set for your property will likely depend on the demand for your property (the higher demand, the pickier you can be) and your risk tolerance (being too picky can cause a vacancy and potential lost rental income, while being too lax can result in a tenant who potentially can’t or won’t pay rent).
To set standards for your property, there are three variables you’ll want to consider: credit score, frequency of late payments, and outstanding debt (including the rent you’re expecting) relative to monthly income. These three variables are all related, but you may decide to put more emphasis on one more than the other based on your experiences or preferences.
It’s also important to note that in some cases, a tenant won’t have a high credit score for a variety of reasons. If you’re willing to let the tenant show other proof that they’ll be able to pay the rent every month (like income or savings), this can be a helpful screening alternative for tenants with low or no credit.
When Should You Use a Credit Report Provided by the Tenant?
In larger cities (and elsewhere), tenants are accustomed to applying for multiple properties before being selected by a landlord. In these more competitive markets, tenants will often obtain their own credit report to present to every property they are applying for. This saves the tenant money by minimizing application fees, which can really add up.
If a renter wants to use a credit report that they have already paid for (as part of another rental application), we recommend allowing this — as long as the renter could not have doctored or changed the report.
For example, Avail allows renters to pay for a credit report and background check and share the results with other landlords whose properties they are applying for. Our system keeps the renter’s credit report information in our system (securely encrypted) for 30 days after the initial application.
If the renter wishes to share these reports, they can invite the other landlords to view the reports inside our system. There’s no chance anything could have been changed or altered because the report was never in the tenant’s hands.
How to Get a Credit Report for a Tenant
Obtaining a credit report from a prospective tenant used to be nearly impossible for individual landlords and resulted in a hard inquiry that negatively impacted the tenant’s credit score.
Fortunately, the process is a lot simpler now. Rather than taking tenant’s personal information and manually entering it into a system, tenants can authorize soft credit checks that won’t negatively impact their credit score directly and securely through Avail.
Once the reports are authorized, they are automatically pulled and shared with both the landlord and the tenant in their Avail accounts. Landlords can quickly view the necessary information, and tenants can share their reports with as many landlords as they want.
Get started screening tenants with Avail and request automatic credit reports from tenants. Create an account or log in to manage your tenant screening and renting needs, all in one place.
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Although each state has its own database for criminal records, there are services (such as ours) that collect the data across all states to provide a national criminal background view.
With each criminal history report, you’ll be able to see the type of crime that was committed, the state it occurred in, and the sentencing. If you’re using the reports for tenant screening, you may be able to determine if there’s a pattern or recurring problem. If there have been recent convictions or there looks to be a continued pattern of crime and violence, you’re within your rights to decline the application.
While it’s not explicitly against Fair Housing laws to decline to rent to a convicted felon, it’s imperative that you follow a standard set of screening procedures that you use every time you screen a prospective tenant.
If you are using a criminal record to discriminate against applicants, or you have a blanket policy against renting to anyone with a criminal history, you could be found in violation of the Fair Housing Act. Make sure you understand how to properly evaluate a criminal background check and know which circumstances you’re within your rights to deny a tenant based on their criminal history.
Note that some states and cities have passed legislation to limit a landlord’s ability to run criminal background checks in the screening process, so make sure that your local laws allow background checks.
Next, we’ll discuss how to put the rental application and reports together to determine if a tenant is the right fit.
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Always require tenants to authorize you to pull their credit report. Many newer landlords feel the credit report isn’t necessary because 1) tenants need a place to live and 2) they can always evict them if they don’t pay or can no longer afford the rent. But that’s not always the case.
Why Is a Credit Report Important?
The truth is that an eviction is difficult and often results in your tenant living in your rental for the remainder of the term for free. Seasoned landlords and property managers know to avoid evictions at all costs.
Just the act of requiring a tenant to authorize a credit report — not even actually pulling the report — will scare away tenants that know they have a bad credit history. This is especially true if you charge the tenant a fee for the application and credit report.
We still recommend you actually pull the report. You’re essentially providing credit because you’re allowing someone to live in your property before you receive all payments. You need to know that they’re capable of making payments going forward.
What’s on a Credit Report?
A credit report shows three things: delinquent accounts and debt balances, actual debt and payments needed to satisfy them, and payments made on trade accounts.
Credit Score: The first is a summary that shows how many accounts are delinquent, the current debt balances, and the credit score. The credit score, which is widely used across many industries, is a numerical value that’s placed on the person’s credit worthiness.
Actual Debt and Payments Needed: You’ll be able to see how much actual debt an applicant has and what the required monthly payments are to satisfy that debt. Your tenant’s income should usually be three times the monthly asking rent amount.
Trade Accounts: You can look at each trade account they have and how timely they’ve made payments in the past. You’ll see a month-to-month visual display showing when they’ve made payments on time, 30 days late, 60 days late, 90 days late, or 120 days late or more. If they can pay their other debts timely, chances are they’ll pay their rent timely, too.
Next, we’ll discuss the criminal background check, what it means, and when you pull one.
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