As a landlord or property manager, you want to rent to reliable, responsible tenants. A rental background check can help you do just that.
In this blog post, we’ll discuss everything landlords need to know about rental background checks – from what they are to what they can uncover to how to use them.
So whether you’re a new landlord just starting out or an experienced pro looking for a refresher course, read on for all the info you need.
- A rental background check can help landlords determine if a potential tenant is responsible and trustworthy.
- The main parts of a rental background check may include criminal history, rental history, past eviction history, current employment, credit score, and references.
- A rental background check fee may cost between $25 and $50 and can be charged to an applicant or paid by the landlord.
- Top online tenant screening services include E-Renter, RentPrep, and SmartMove.
General information from a rental background check
As a landlord, it’s essential to perform your due diligence when screening tenants. While it’s great to have someone move in quickly, you don’t want to sacrifice quality for speed. A rental background check can give you a good idea of what kind of tenant someone may be.
Running a background check can help you ensure that you’re renting to a responsible and trustworthy individual. In addition, it’s important to remember that state and federal laws apply to tenant screening activities, so be sure to familiarize yourself with the laws or retain counsel first.
There are several items that may be included in a background check when screening potential tenants.
A criminal history check reveals any arrests or convictions that the applicant has on their record. Landlords must be particularly cautious when seeking or relying upon criminal history checks as part of a tenant screening process. Some states or localities prohibit landlords from using criminal background searches.
The U.S. Department of Housing and Urban Development (HUD) has issued guidance on the use of criminal history reports, reminding landlords that they must “prove through reliable evidence that [their] policy or practice of making housing decisions based on criminal history actually assists in protecting resident safety and/or property.” HUD has further cautioned that “[b]ald assertions based on generalizations or stereotypes that any individual with an arrest or conviction record poses a greater risk than any individual without such a record are not sufficient to satisfy this burden.”
According to HUD, landlords and housing providers may not impose a blanket prohibition on any person with a conviction record. Instead, they must consider when the conviction occurred, what the underlying conduct entailed, and what the applicant has done since the conviction to determine whether the applicant poses a demonstrable risk to resident safety and/or property.
This includes information on the applicant’s past landlords, leases, and tenancy issues. This can give insight into an applicant’s ability to rent responsibly.
If an applicant has a history of not paying rent on time or causing damage to property, they may do the same in the future. Conversely, if an applicant has a clean rental history, they may be more likely to be a responsible tenant.
When you’re running a background check on a rental applicant, look at their past evictions. This section of the background check will reveal whether or not the applicant has been previously evicted from a rental property.
An eviction doesn’t necessarily mean that the applicant is a bad tenant—there could be extenuating circumstances, such as a job loss or illness. Nevertheless, it’s still something you’ll want to take into consideration when making your decision. If you have any concerns, you can always contact the previous landlord to get more information about the situation.
The employment section of the background check will reveal whether the applicant is currently employed, and, if so, where they are working. It will also list any previous employers that the applicant has had. This information can be helpful for landlords in 2 ways. First, it can give them an idea of the applicant’s work history and stability. Second, it can help them to verify the applicant’s income levels.
However, background checks can only tell you so much. That’s why it’s also a good idea to speak with an applicant’s employer personally. This allows you to get a better sense of their work history.
A credit score is a numeric representation of an individual’s creditworthiness. It is based on information from credit reports, which detail an individual’s credit history. Credit scores range from 300 to 850, and the higher the score, the better. The higher the applicant’s credit score, the more likely it is that the individual will be able to repay their debts.
Landlords use credit checks as part of background checks for rental applicants. A high credit score may indicate that the applicant is financially responsible and is less likely to default on rent payments. Conversely, a low credit score indicates that the applicant may be a high-risk renter and more likely to default on rent payments. As such, landlords will typically give preference to rental applicants with high credit scores.
A rental background check will reveal a prospective tenant’s rental history, credit score, and any eviction filings or outstanding judgments against them. While this is certainly valuable, it’s also important to speak directly with an applicant’s references.
This provides an opportunity to ask specific questions about the applicant’s rental history and to get a sense of their character. It can also help to verify the information that is included in the rental background check. Ultimately, speaking with an applicant’s references is a key part of making an informed decision about whether or not to approve them for tenancy.
How much does a rental background check cost?
The price of a background check will depend on the company you use and the type of information you’re looking for. However, most companies will charge between $25 and $50 per background check.
Some landlords may require applicants to pay for their own background checks as part of the application process
This may deter applicants who are not serious about renting your property. If someone is willing to pay the fee, it may show that they are more likely to follow through with the rental process.
However, a tenant screening fee could dissuade qualified applicants from applying. If someone has limited resources, they may not apply if they know they have to pay a fee up front.
Ultimately, it’s up to the landlord to decide whether or not to charge an applicant for a rental background check.
What to look for in a rental background check service
Several different background check services are available, and it can be challenging to determine which one is right for your needs. Here are a few tips to help you choose:
- Make sure that the service offers a comprehensive background check. This may include a criminal background check and a review of the potential tenant’s rental history, including eviction reports.
- Choose a service that is affordable and easy to use. There are a variety of services available, and prices can vary widely. Compare prices and features to find the best value for your specific needs.
- Select a service that is reliable and has a good reputation. The Fair Credit Reporting Act (FCRA) regulates background check services, so make sure to choose a service that complies with this federal law.
Best online rental background check services for landlords
These are the 7 best tenant screening services of 2022, according to recent research from Investopedia:
- Best Overall: First Advantage
- Best for Realtors: SmartMove
- Best for Multiple Properties: RentPrep
- Best Value: E-Renter
- Most Comprehensive: VeriFirst
- Best Criminal Background Search: BetterNOI
- Best Predictive Model: RealPage
To arrive at these rankings, Investopedia reviewed 18 tenant screening services based on price, breadth of services, speed, and compliance with the FCRA. From this research, they chose the best 7.
A rental background check is an essential tool for landlords to screen for red flags that may indicate a tenant is likely to cause problems.
For example, a rental background check can reveal a history of evictions, relevant criminal convictions, and unpaid rent. Additionally, a rental background check can help landlords verify information provided by the tenant, such as employment history and rental history.
Ultimately, a rental background check can provide peace of mind and help protect landlords from potential liability.