What should be included in a tenant background check?
Now that you know what a tenant background check is and why it's so important to conduct one for all of your potential tenants as the property owner, the next step is to learn what's included in a proper tenant screening. Again, every landlord has their own preferences on this matter, but we've compiled a comprehensive list for you below.
Feel free to pick and choose any of the following options. However, in general, the more information you can get on a potential tenant, the better.
Criminal background check
On the whole, having a policy that prohibits renting to anyone with a criminal history is considered discriminatory. That said, you can make decisions on whether to rent to someone who's been convicted of past crimes that might jeopardize the safety of your other tenants or your property. Typically, when looking at an applicant's criminal history, it's important to consider the type of offense that occurred, the severity of the offense, and how long it's been since the crime was committed.
Since this can often be a gray area, HUD has issued a set of guidelines on this matter. It's for landlords and is aimed at helping you decrease the chances of enforcing discriminatory housing policies.
Sex offender registry check
When a tenant's criminal past involves the sex offender registry, things get even more complicated. In this case, both the renter's rights and the landlord's rights are decided on a state-by-state basis.
In California, for example, a law states that landlords cannot discriminate against sex offenders. However, your state might have different guidelines, so you should take the time to ensure that you're up to date on where your state stands on this issue before screening any potential tenants.
For the most part, landlords use credit reports to determine whether a potential renter is fiscally responsible and pays their bills on time. Keep in mind that while you won't be able to see their exact credit score, you will be able to see any loan amounts, accounts in collection, and bankruptcies. You'll also be able to see any suits, meaning you'll know if a potential renter has ended up in landlord-tenant court for failing to pay rent.
Proof of income and employment verification
Generally, it's accepted that you will need proof of income in order to accept a potential tenant's rental application. Obviously, you're well within your rights to know whether they're going to have enough income coming in to support paying the amount you're charging for rent.
With that in mind, the easiest way to obtain this information is by collecting recent pay stubs. Typically, landlords ask for dated pay stubs from the last three months. Though, if your potential tenant is self-employed or a freelancer, your best bet is to ask for a copy of their most recent tax return instead. If possible, you may also want to call their employer for employment verification.
Reference from a previous landlord
While it's not required, it's always a good idea to ask for a reference for a previous landlord. This can either come in the form of a formal letter or you can simply ask for the landlord's contact information and call them up.
In particular, you'll want to ask questions regarding your potential tenant's rental history, including how long they rented from that landlord and whether they paid their rent on time and kept the property in good condition.
Lastly, it's important to verify whether your potential renter has an eviction history. To do this, you can ask their previous landlord when you're calling for a reference. However, you can also take the time to check county court records on your own.
Tips for doing your own tenant background check
Now that you have a clearer idea of what the tenant screening process entails, it's time to think about how you'll go about conducting this process yourself. To that end, we've laid out a few tips that will help make the process easier. Read them over so you'll have a better idea of what to do.
Hire a property manager
For starters, if you want to make the tenant background screening as easy as possible on yourself, consider hiring a property manager. A good property manager will be very familiar with the ins and outs of tenant screening, including knowing what is and is not allowed, according to the laws in your state. They should be able to do all the legwork on the screening process and bring you the top applicants so you can make the final decision.
Use a tenant screening service
If you don't have enough rental units to make hiring a property manager worth the cost, consider using a tenant screening service instead. In general, a screening company will collect information from your prospective tenant using an online rental application and then complete the background checks for you. When all the work is done, you'll receive a tenant screening report, which will compile all the relevant information you should know in one place.
Make sure you're familiar with fair housing laws
As mentioned, every landlord needs to be familiar with fair housing laws. There are, after all, acceptable and unacceptable reasons for turning down a tenant's rental application. You should take the time to familiarize yourself with these laws so you don't skirt the line of discrimination.
Hold onto original applications for your records
Lastly, make sure to hold on to any important paperwork for your records, including all potential tenants' original rental applications. If you do ever happen to be brought to court on a discrimination charge, a rental application may serve as evidence in your case.
The bottom line
Tenant background screening is an important task for anyone who owns a rental property. That said, it's not without its intricacies. To that end, use this post as a general guide to the process. However, if you have specific questions about rights landlords and tenants have in the area where you live, your best bet is to reach out to a real estate agent or a real estate attorney for more clarification.