A Guide to Tenant Screening and Background Checks

If you plan to rent out a property, you want assurance that you’re renting to honest and responsible tenants. That said, it’s important to learn more about the kind of person or people you’re potentially entering into an agreement with. Fortunately, there are multiple ways to investigate the background of potential renters, including through screening companies and even on your own. However, the process isn’t quite as simple as it sounds, and an incorrect report or bad practice on your part can lead to a lawsuit, fines, or worse. Review this guide to tenant screening and background checks to help you get started with the process.

What Is a Screening or Background Check?

In a perfect world, everyone could trust one another without any concerns. But in the real world, there are individuals who take advantage of others’ trust. Renting out a property can be a fraught endeavor. You might end up with the greatest tenants in the world, or you may end up with one who falls behind on rent, damages your property, and leaves the space unhealthy and unlivable. That’s why background checks are so important.

You can hire a company or individual to review a potential tenant’s past, looking for possible issues that could disqualify them from renting. Background checks search for any negative history regarding credit issues, criminal actions, identity fraud, government watch lists, and the like. This process does not give you a complete understanding of how a person will be as a tenant, but it certainly offers you a heads-up regarding potential problems.

Gain Applicant Approval

To save everyone time and money, you should indicate in your advertisements and through rental agencies that all potential tenants will be subject to a background check. Most individuals who know they won’t pass for some reason or other typically won’t apply. Additionally, rules may vary from state to state, but most background investigation services will require a signed consent form from the potential renter. This is crucial because they need to approve the search; otherwise, it’s considered unlawful.

A consent form should be a standard part of your rental application, with room for the applicant’s signature to indicate their approval of the screening. Before proceeding with a background check, ensure they provide their name, social security number, driver’s license info, employment information, pet ownership, and similar identification and identifying marks. So much can be found—or not found—using this basic information.

Hire a Background Screening Company

The general impression of the internet is that it is a place where everything is known about everyone. But that’s just not so. While Google searches might turn up information about potential clients, there’s no guarantee that what you find is accurate.

That’s why it’s crucial to invest in a proper background screening. Find a respected company with a great reputation and speak with a representative to learn how much a check will cost, what is involved, and any additional details. The FTC is a good source for finding reputable companies.

Know What You Can and Can’t Do When Evaluating Tenants

Before you start the screening process, you must know what you plan to do with the information provided by the background check. Obviously, you cannot discriminate because of a person’s skin color, gender, sexual orientation, age, or the like, and you can’t claim to use the background check as an excuse to do so.

Also, while an extended criminal record of setting fires is a good reason to say no, for instance, a single youthful shoplifting conviction is not. Check Fair Housing and other laws and consult with your lawyer for further information on what you can and can’t do during the tenant interview process and when a denial is justified. But remember, everyone deserves a second chance.

Obtain Proper References

As part of the application process, potential residents should provide references. Specifically, they should have the contact information for former landlords and property owners, employers, and respected members of the community.

Landlords can speak to their past behavior as a tenant and will share any issues that might have come up over the years. Employers can address the individual’s employment status and behavior at work, although you’ll need the tenant’s consent to speak with them. Naturally, if a person you respect can vouch for them, you should take that into consideration as well.

Conduct an Interview

If the tenant has only one or two quibbling issues in their background check, take the time to speak with them one-on-one and in person. There’s no need for you to pry, but you can mention your concerns and give them the opportunity to explain. After all, people lose jobs and experience financial issues through no fault of their own all time. If the evidence shows they’re in good shape, believe them.

As a side note, observe the applicant’s behavior and note anything that might contradict their claims. For example, do you have a firm nonsmoking policy in place? If they promise they never smoke but still smell of cigarettes, that’s worth pursuing to determine whether they are worth signing on as a tenant.

Watch for Red Flags

Finally, it is essential to make note of any red flags that come up during a background check or in the interview. If the applicant doesn’t provide some of the requested information, they may have forgotten, or they might be trying to hide something. If this occurs, be sure to raise the point before proceeding. Most of the time, they just forgot or overlooked the question.

If they don’t provide information about their employment history and income, that could mean several things. The applicant might not currently have a job, or they may only be intermittently employed, which means rent payments could be inconsistent. If they appear to have income but no visible means of support, that might signal independent wealth or illegal activity. Frequent moves could mean they’re on the road a lot or were frequently transferred by their employer, or it could mean troubles with landlords and roommates.

Ultimately, you must compare the results of the screening or background check with the information the potential tenant provides. Are the details in sync, or are there discrepancies, mistakes, and outright falsehoods? Finding enough issues will make your decision to rent or not rent that much easier.

If you have any questions after reviewing this guide to tenant screening and background checks, please reach out to our team at PSI Background Screening. We’ll arrange for a consultation and provide more information about how we conduct our background investigation services.