Landlords and property managers who want to rent an apartment, home, or other rental property should perform a background check on prospective renters as part of the tenant screening process.
Our tenant background check authorization form makes it easy to obtain important information that could highlight red flags in a rental application. This form also helps provide peace of mind to property owners and managers who depend on rental income and filled vacancies.
This article highlights what you should know about tenant background checks and gives insight into evaluating the findings a background check uncovers.
Why Should I Run a Background Check?
A comprehensive tenant background check tells you critical details about a prospective tenant. If you ask the right questions on a background check form, you can learn about an applicant’s credit history, any criminal history, the prospective renter’s current income, and other vital facts that shed light on the type of tenant you might acquire.
To get the most thorough information about a potential renter, you should first use a tenant background check authorization form to obtain permission for the detailed screening.
Having an applicant sign a specific and separate background check authorization form is an excellent way to prevent confusion or misunderstanding about the kinds of information you are requesting to complete the tenant screening. It also provides landlords and property managers with a complete and separate authorization form for third-party companies that might run the background check.
How to Run a Background Check on a Tenant
Once a potential renter fills out a background check authorization form, send it to a tenant screening agency.
You can find several agencies online that will take an applicant’s information and run a screening report.
Depending on what information you request and the nature of the agency, it may take several days to a couple of weeks to complete the process.
What Causes a Red Flag on a Background Check?
There are several warning signs to watch for on a tenant background check. If an applicant performs poorly in one of these areas, it is not necessarily a deal-breaker. However, if you discover multiple red flags, this is likely a prospective tenant to avoid.
Low Credit Score
A credit score of less than 600, especially combined with bankruptcies or multiple collection notices, can mean an applicant is irresponsible financially and careless about paying bills. This behavior may also suggest that the potential tenant has chronic cash flow problems. In either case, this is probably not the kind of person you want to depend on to pay rent consistently.
Insufficient Income
The current best practice for evaluating an applicant’s income is that the prospective tenant should have a monthly income of three times the monthly rent. If potential renters meet this requirement, you can usually assume the rent is affordable to that applicant.
As judged by the above standard, tenants who do not have sufficient income likely cannot pay the rent along with other bills no matter how much they insist they can cut corners.
Prior Rental History
There are several things to watch for in terms of evaluating a background check and looking at prior rental history:
- Bad references from landlords — Did the tenant get all previous deposits back? Was the tenant evicted?
- Multiple short-term rentals — There could be legitimate reasons for moving several times in a year, but this is something you should investigate.
- Breaking their lease — Again, tenants may have had cause to break a lease once. If they have a habit of doing so, you should be wary of renting to them.
- Prior eviction history — In the U.S., landlords file roughly 3.7 million eviction cases each year due to tenants’ missed rent payments, lease violations, and other legal infractions.
Criminal History
One in three adults has a criminal record in the U.S. Not all criminal infractions carry the same weight, and you may find that you are comfortable renting to someone with multiple parking tickets or a gambling misdemeanor, for example. However, as a landlord, you have your other tenants and your insurance to think about. Some things to consider:
- Domestic violence — A tenant with a domestic violence conviction or a restraining order has shown a propensity for aggression and poor decision-making.
- Multiple DUIs — This indicates that a prospective tenant may have an alcohol problem and lack respect for the law.
- Any felony conviction where the offender is still on parole.
Keep in mind that some cities and states restrict or prohibit criminal background checks so it is important to know your local laws and regulations.
What Can You Not Include on a Tenant Background Check?
You cannot use a tenant background to deny a tenant a residence based on Fair Housing Act criteria.
This law prohibits questions about your prospective renter’s race or ethnicity, national origin, religion, gender, familial status, and disability.
Be careful when reviewing your screening reports. The FHA considers past alcohol or drug abuse as a disability, so evidence of prior drug convictions may not be sufficient grounds for refusing an applicant.
However, a conviction for the manufacture or sale of drugs is proof of more serious criminal behavior.
Tenant Background Check Summary
A background check is part of an intelligent overall plan to thoroughly screen all applicants for your rental.
However, in addition to performing a background check, landlords and property managers should consider other information.
For example, if your rental terms are reasonable, you should consider rejecting any prospective tenant who cannot meet your requirements or tries to bargain with you. Suppose you have a noise rule that limits loud parties after 10 p.m. on weekdays. A prospective tenant who says they are a DJ who has sessions until 11 p.m. may not be worth accepting.
However, landlords’ proposed terms sometimes conflict with local, state, and federal laws. For instance, property owners who have a blanket requirement to reject pets might find themselves in trouble for refusing to accept a service animal.
Tenant Background Check FAQs
How much does a tenant background check cost?
The cost for a tenant background check depends on the agency you choose and the depth of the report. Typical tenant screening agencies charge $45. Other agencies might charge from $15 to $60. Find a few resources to see which screening agency provides the services you want at the best price.
Who pays for a tenant background check — landlord or tenant?
The short answer is that it depends upon your local rules and laws. Some jurisdictions have made it illegal for landlords to charge prospective tenants for background check fees. You will need to verify your local laws before you make that determination.
How Do I Get a Tenant Background Check Authorization Form?
There are generic background check authorization forms available online, but you can use our step-by-step builder to create your background check authorization form. Using our form builder lets you make a customized document with the exact information you want and helps you explain to your prospective tenants what you are looking for in the background check. That way, there will be no surprises between you and the applicant. Our form builder walks you through the steps to create a ready-to-use tenant background check authorization form.
