Every new lease comes with risk. The wrong tenant can damage your property, create problems for neighbors, and cause significant financial losses.
Screening prospective tenants gives you the information you need to make smarter leasing decisions.
Here’s what you need to know about the tenant background checks and how to stay compliant with the law when you conduct them.
Key Takeaways
- Screening renters helps you verify their income, credit history, and ability to pay rent on time, confirm a solid rental history, protect your property and the people around it, and safeguard your reputation.
- Tenant background checks may include identity verification, credit checks, employment and income verification, national and county criminal records checks, and national sex offender registry checks.
- Before running a tenant background check, make sure you have the applicant’s written consent. From there, use a standard rental application to collect their information, then partner with a trusted screening service to pull the reports. Once you’ve reviewed the results, if anything in the report leads you to turn down the application, you’re legally required to send the applicant an adverse action notice explaining your decision.
What is a Tenant Background Check?
A tenant background check gives you a complete picture of who you’re renting to by looking into an applicant’s employment status, income, credit history, criminal background, references, and any past evictions.
Why Should You Screen Renters?
1. Ensure They Can Afford the Rent
Screening renters allows you to ensure that they have enough income to afford the monthly rent.
It also shows whether they have a history of paying their bills and rent on time or if they instead tend to be late or fail to pay altogether.
A background check can also show whether a renter has a limited credit history, which is common for younger tenants.
In that case, you might protect yourself by requiring a co-signer with good credit, such as a parent or guardian.
Thoroughly screening tenants helps you avoid the headaches that come with late payments, missed rent, and unpaid balances.
2. Confirm a Tenant’s Good Rental History
Checking references with past landlords can reveal whether an applicant has a history of property damage or issues with cleanliness. For example, perhaps they damaged carpets in a previous unit or kept an undisclosed pet that caused damage.
This is information you’d want to be aware of.
3. Protect Public Safety
Running a criminal background check on a prospective tenant can help you avoid renting to someone who poses a safety risk to others.
If an applicant has a history of violent felony convictions, that’s a serious red flag; leasing to them could put your other tenants and the surrounding neighborhood at risk.
4. Reduce the Risk of Evictions
If an applicant has a history of evictions, this is also a red flag as it signals a pattern of lease violations or chronic non-payment.
And since the eviction process is time-consuming and costly, it’s worth screening for this upfront.
5. Protect Your Peace of Mind
Conducting tenant background checks helps you to know that your tenants are responsible, safe, and can pay rent on time.
Confirming these factors can give you peace of mind that you’re making a good choice when signing a lease.
6. Safeguard Your Property’s Reputation
Skipping the screening process can leave you with a building full of problematic tenants.
Good renters will take notice and look to live elsewhere, which will make it harder to attract and keep the quality tenants you want.
What’s Typically Included in a Tenant Screening Report?
Identity Verification
Identity verification is an initial search performed by consumer reporting agencies (CRAs) when completing tenant background checks.
This search confirms that a person is who they claim to be and that the records uncovered belong to them.
Identity Verification
Verifying an applicant’s employment history confirms they have a steady income and a solid track record of staying employed, giving you a clearer picture of whether they can afford the rent now and are likely to keep up with payments down the road.
Credit Check
A credit check gives you a window into an applicant’s payment history and debt load, which helps you gauge their overall financial responsibility and likelihood of paying rent on time.
National Sex Offender Registry Search
Whether you’re renting out an apartment or a single-family home, running a National Sex Offender Registry search is an important step in keeping your tenants and the surrounding neighborhood safe.
Renting to a registered sex offender puts nearby residents at risk, and once their address appears on the registry, it could deter prospective tenants from renting from you down the line.
Criminal History
Conducting a national criminal records search and a county criminal records search shows whether a potential renter has criminal convictions or pending charges that could place your property or others at risk.
For example, if an applicant has a conviction for selling or manufacturing illegal drugs, that conviction might indicate that they could damage your property and place both it and the neighborhood at risk.
How to Run a Legally Compliant Background Check on a Tenant
As a landlord, you must comply with several important laws when conducting background checks on tenants.
Federal Laws
Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) is a consumer privacy law that applies to landlords and credit reporting agencies (CRAs) in all 50 US states.
Under the FCRA, CRAs must have reasonable procedures to ensure maximum accuracy.
Reasonable procedures mean that:
- The CRA uses rigorous processes to verify the individual’s identity and confirm records that they find belong to them
- The CRA verifies the accuracy of the data’s source
- The CRA reinvestigates disputed items within 30 days
- Any information found to be inaccurate is immediately deleted
- The CRA has guidelines for data furnishers to report complete and accurate information
- The CRA conducts regular internal audits and data sampling to ensure accuracy
They must also require landlords to certify that they will only use the information obtained for housing and not for any other purpose.
Finally, CRAs must provide notice to landlords about their responsibilities under the FCRA.
As a landlord, you must:
- Notify tenants that you conduct background checks
- Obtain a tenant’s signed consent before initiating a background check
- If you learn information from a tenant background check that makes you decide you don’t want to rent to the applicant, you must complete the adverse action process by sending a pre-adverse action notice, giving a reasonable opportunity to respond, and sending a final adverse action notice with a copy of their FCRA rights if you ultimately decide not to rent to them.
Fair Housing Act
The Fair Housing Act (FHA) prohibits discrimination in housing based on an applicant’s protected characteristics (national origin, color, race, sex, religion, familial status, disability).
When screening applicants, apply the same process to everyone, as running checks selectively on certain groups can cross into illegal discrimination territory.
You also can’t discriminate against applicants with children under 18 or those with disabilities who can be reasonably accommodated.
State and Local Laws
Landlord-Tenant Laws
Landlord-tenant laws vary significantly by state, with some offering stronger protections for landlords than others.
Some common areas these laws cover include:
- Warranty of habitability – Generally, landlords are expected to provide homes that are safe, sanitary, and livable. This includes maintaining functional plumbing, heating, air conditioning, and electrical systems. For example, Colorado Rev. Stat. 38-12-501 et seq. requires landlords to provide safe and sanitary rentals, regardless of whether there is a written lease or not.
- Eviction laws – States require landlords to follow a specific legal process to evict tenants. Make sure you understand the requirements in your state.
- Reasonable notice – Many states require landlords to give tenants advance notice when they will inspect their property. Notice periods might range from 24 to 48 hours in advance. For example, Alabama requires landlords to give tenants at least two days’ notice before entering to inspect under Ala. Code 35-9A-303, while Alaska Statute 34.03.140 requires landlords to give tenants at least 24 hours’ notice before entering to inspect.
Health and Safety Regulations
Municipal and state governments often have regulations about health and safety that you must know and comply with.
For example, you might need to ensure that your rental properties have working smoke alarms and carbon monoxide detectors.
Steps to Run a Tenant Background Check
1. Obtain Written Consent
Before you conduct a tenant background check, let them know that you intend to do so and obtain their written consent.
This enables you to comply with the FCRA.
While you can require applicants to pay for the background check as a part of your rental application fee, make sure the cost is reasonable.
2. Use a Standard Rental Application Form
Use a standard application form that complies with your state’s regulations. It should capture everything you’ll need to run a thorough screening, including:
- Full legal name
- Date of birth
- Current address
- Social Security Number (SSN)
3. Choose a Reputable Tenant Background Check Service
For accurate, legally compliant, and thorough reports, work with a reputable background check service like iprospectcheck.
Our online platform helps to streamline the process, and we fully comply with the FCRA and state and local laws.
4. Review Reports
Once you receive your reports, review them carefully to look for red flags, including late payments, debt collection accounts, judgments, eviction history, or criminal activity.
5. Verify Information
Check the applicant’s rental references by contacting previous landlords.
6. Send an Adverse Action Notice
If you deny an applicant based on the report, you are legally required to provide them with an Adverse Action Notice explaining why.
Give the tenant a reasonable opportunity to respond and dispute inaccuracies.
If you make a final decision not to rent to the applicant, send a final adverse action notice. Include a copy of their FCRA rights and the name and contact details of the CRA that provided the reports.
When a Property Stops Being a Community
A landlord believed tenant screening was unfair and chose not to run background checks on applicants. Over time, the property changed in ways he never expected. Here’s the story.
Show more
A landlord owned a modest 50-unit apartment complex and proudly claimed he did not “judge people by their past.” He refused to conduct tenant screening of any kind. No criminal background checks. No sex offender registry searches. He believed screening was unnecessary and even unfair.
At first, the philosophy sounded compassionate. Units filled quickly. Vacancy rates stayed low. Rent checks came in.
But over time, the property changed.
Families began moving out. Long-term tenants stopped renewing leases. Complaints about drug activity, theft, assaults, and disturbances increased. Police calls became common. Maintenance costs soared as vandalism and neglect spread throughout the complex.
Eventually, prospective tenants began searching the address online before applying. When they performed public sex offender searches, the property identified multiple hits in a very compact area. This specific complex.
The damage went beyond reputation. Property values declined. Insurance costs increased. Quality tenants avoided the complex entirely. What had once been a stable housing community became a place that people warned others about.
Eventually, he called iprospectcheck, having been referred by another landlord. We helped him put a solid, compliant screening program in place. Slowly, over time, the property replaced its tenant group with more reliable tenants. It would take years of working together, one new tenant at a time, to rebuild the reputation of the community.
Implementing responsible screening practices helped him to make informed decisions, apply standards consistently, and reduce foreseeable risks.
A rental property is not just an investment. It is a community. Once that community is lost, rebuilding trust can take years. Having a reliable screening partner is a critical component of responsible property management.
iprospectcheck: Your Trusted Tenant Background Check Partner
Renting to the wrong tenant can put your property, your other renters, and your bottom line at risk.
A thorough screening process helps you make smarter, more informed decisions before renting your property.
At iprospectcheck, we conduct tenant background checks for landlords and property managers in every state and always comply with all laws and regulations.
Contact us today for more information about our screening packages or to get a free quote: (888) 509-1979.
DISCLAIMER: The resources provided here are for educational purposes only and do not constitute legal advice. Consult your counsel if you have legal questions related to your specific practices and compliance with applicable laws.
FAQs
As a tenant, can I run a background check on myself?
Yes, you can run a background check on yourself with a professional provider like iprospectcheck.
We provide thorough personal background checks that let you see what a prospective landlord might see.
You can then correct any errors and plan how to address potential issues that might arise.
What disqualifies you from renting an apartment?
A landlord might reject your rental application for any of the following reasons:
- Poor credit history – A potential landlord will likely check your credit. If you have a high debt-to-income ratio, a history of making late payments, collection accounts, or a recent bankruptcy, you might be turned down. Some landlords have a minimum credit score. It’s a good idea to check your credit before you apply and correct any errors you find.
- Insufficient income – Many landlords want to see that you earn three to four times the monthly rent. If your income is deemed too low to comfortably afford the rent, you might be denied. However, this is changing in high-cost-of-living (HCOL) areas, where you might be approved to rent an apartment with an income of two times the rent.
- Unverifiable employment/income – If you don’t provide adequate proof of employment and income, a landlord might turn you down.
- Eviction record – Having one or more evictions on your record can make it difficult to rent an apartment.
- Poor landlord references – A potential landlord might check with your past landlords to ask about their experience renting to you. If you caused damage, regularly made late payments, or committed other lease violations, it can harm your rental application.
- Criminal record – Many landlords reject applicants with felony records. Some may also reject you if you have a history of misdemeanor domestic violence convictions. If you have a criminal record, it might be smart to research expungement laws in your state to determine whether you might be eligible. Expungement laws seal eligible criminal records so that potential landlords can’t see them.
- Falsified application – If you include false information on a rental application, you will likely be rejected. Some examples include listing a relative as a fake landlord reference, fudging the dates you lived at an address, or falsifying your income and employment information.
How long does a report take to come back?
How long a tenant background check report might take depends on the records requested. Some reports may be available within minutes to hours, while others can take a couple of days.
How much does a background check cost?
The cost of a tenant background check depends on the reports you request and the provider you choose.
At iprospectcheck, we offer several affordable packages and add-on searches to meet your needs. We also offer volume discounts. Contact us for a free quote.
