A Rental Application is a document landlords and property managers use to screen prospective tenants before they sign a lease agreement and move into a rental property, including a room, home, or apartment. The purpose of this form is to assess whether an applicant would be a suitable renter for a property.
How to Run A Background Check
1. Tenant Fills Out a Rental Application Form
When a potential tenant expresses interest in your property, the next step is to have them complete a rental application. It should include a Fair Credit Reporting Act (FCRA) Disclosure informing the tenant of their rights during the background check process.
Application Fees ($) – Depending on state laws, the tenant should be charged a non-refundable background check processing fee.
When considering the legality of a rental application, it helps to know that it is not legally binding like a lease agreement.
2. Verify Applicant’s Identity
Verify the applicant’s identity to ensure they are who they claim to be. This typically involves checking a government-issued photo ID, such as a driver’s license or passport.
3. Perform a Credit Check
Conduct a credit check to assess the applicant’s financial responsibility. This will show their credit score, debt history, and payment history, giving insight into their ability to pay rent on time. You’ll need the applicant’s Social Security number and written consent to run a credit check.
You can pull the tenant’s credit report directly from a credit agency.
- SmartMove.com – $40 (includes criminal background and eviction checks)
- MyRental.com – $14.99
- RentPrep – $21 (does not require tenant involvement)
- E-Renter.com – $31.95 + $2.49 (includes criminal record and sex offender checks)
The websites above also include a check on the applicant’s criminal history. Certain states and cities have regulations regarding how criminal history can impact rental decisions.
4. Verify Rental History / Talk to Previous Landlords
Contact previous landlords or property management companies to verify the applicant’s rental history. Ask about their payment history, lease violations, and whether they would rent to this individual ever again. Make sure to ask the following about your applicant:
- Were there any issues with rent payments?
- Were they served with an eviction notice? If so, what was the reason?
- Did they leave the residence in good standing at the end of their lease?
- Did any previous neighbors have any complaints about the applicant?
5. Verify Employment and Income
As a landlord, you must verify and confirm the applicant’s employment status and income. This can be done by contacting their employer directly and/or asking for recent pay stubs or a W-2 form. This step ensures the tenant can afford the rent.
- For employed applicants – check for pay stubs from the last three months (use an Income Verification Letter)
- For self-employed applicants – check the tax returns for the last two years (Form 1040)
Speaking with their employer or former landlord is also a good idea to get more information you would not get in a report.
6. Make an Informed Decision
After gathering all the information, make an informed decision on whether to accept or reject the application:
- Approve – Send the tenant an Approval Letter and start drafting a lease agreement.
- Deny – Send a Rejection Letter notifying the applicant that they weren’t accepted.
On average, tenants have a credit score
- within the range of 300 to 580, regarded as having a history of financial challenges,
- within the range of 601 to 660, regarded as fair,
- 800+, regarded as having an exemplary financial track record.
After approval, make sure to check state laws regarding security deposits, landlord’s access to the property, and disclosures.
Compliance with Fair Housing Laws
Ensure that your background check process complies with the Fair Housing Act and does not discriminate based on race, color, national origin, religion, sex, familial status, or disability.
Remember, fair housing laws consider age a protected class, so only collect this information if you need it to run tenant screening reports like credit or background checks.
Frequently Asked Questions
When should I use a rental application form?
As a landlord, you benefit from using an application form if you are:
- A first-time landlord concerned about finding a suitable tenant
- A veteran landlord with bad luck with previous renters
- In a popular location or building that will attract many renters
- Concerned about the financial resources of an applicant
- Screening for more serious tenants who are willing to move in soon
What is a credit reference on a rental application?
A credit reference on a rental application is a person, organization, or business with which an applicant has had a financial relationship.
Obtaining credit references should be part of your normal tenant screening process, in tandem with running a credit check.
The credit references will likely provide valuable information about a prospective tenant’s rent payment habits.
Reviewing an applicant’s credit references gives excellent insight into the likelihood of a landlord receiving rent on time.
Examples of good credit references include:
- Banks
- Utility companies
- Previous landlords
- Local businesses that offered a rent payment plan
- Medical and dental offices
What if I don’t use a residential rental application?
If you do not use a residential rental application for tenant screening and research, you could cost yourself time and money.
After a potential renter fills out your tenant application, you should take the time to review it closely.
Always contact the applicant’s current and previous employers and landlords, and run credit and background checks.
How long does a rental application take?
Generally, approving a rental application takes 24 to 72 hours.
But, because many landlords want to check various personal and financial histories, and databases like those companies offering background checks have access to, this process could be longer.
Landlords should try to streamline their tenant screening process by using online legal forms when possible and hiring third-party companies to run essential checks.
Minimizing the time spent collecting and processing applicant data can lead to better initial experiences with tenants and more captured rental income.
