How to perform & understand tenant background checks

Learn what to expect from a background check, how to make a fair assessment, laws to consider, reputable screening services & what technology to use.
Minut News
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June 11, 2024
min read
How to perform & understand tenant background checks

Effectively assessing the suitability of your tenants is crucial to safeguarding your property management business and ensuring a smooth landlord-tenant relationship.

Failure to do so, and you risk encountering unreliable tenants, financial consequences, and issues with neighbors. This is why a streamlined process for managing tenant background checks should be an integral part of your property management strategy.

In this guide, you’ll learn about:

  • The different kinds of reports a comprehensive tenant background check provides
  • How to use a background check so you can balance risk with rental income stability
  • How different jurisdictions protect tenant rights
  • What information you’ll need from the tenant to run a check and the six steps involved
  • Different tenant screening services and what they offer

With this information, you’ll be able to efficiently use tenant background checks to protect your property management business as you drive occupancy and maintain positive tenant relations.

What’s a tenant background check and what’s included?

A tenant background check is a screening process that forms part of a prospective tenant’s rental application. This helps you evaluate their suitability for renting your property. 

The background check will provide you with information about, among other key areas, the renter’s financial, criminal, and eviction history, so you can ensure they’re reliable, responsible, and capable of meeting their rental obligations.

Ultimately, you’ll be able to assess the risk of renting to them and make an informed decision about whether to proceed with the lease agreement, adjust the value of the security deposit, or reject their application.

Key elements of a typical tenant background check

While the look and source data of your report may vary depending on your tenant screening service and the credit bureau (normally one of Equifax, Experian, or TransUnion), it will normally include the following sections:

At-a-glance summary and risk-assessment score

An initial overview of the check’s findings should provide you with a quick snapshot of the tenant's overall suitability, including key metrics such as their credit score, criminal record status, eviction history, and rental history highlights.

If this summary is positive, you can probably go ahead and proceed with renting your property to the tenant. However, if some issues are raised here, you may have to delve deeper into the report to understand the specific concerns and determine the potential risks involved.

TurboTenant sample screening report summary
A sample screening report summary by TurboTenant.

Credit report

The credit report will give you an insight into how financially responsible your prospective tenant is, with information about their credit score, payment history, outstanding debts, and overall debt-to-income ratio.

To learn more about how these reports work and how to run one, see our guide on tenant credit reports.

Sample credit report
This sample credit report by TenantAlert includes a credit summary showing the tenant’s account balance and monthly payments.

Rental and eviction history

The section on your prospective tenant’s rental history will detail their old addresses, any lease violations, and may include landlord references, too.

It will also show you any history of prior evictions, which are pulled from public records. If you have concerns, you could consider contacting a previous landlord directly to get a clearer picture of any issues raised.

 Sample eviction report
This sample eviction report by TenantAlert includes the address, date of eviction, and settlement amount.

Criminal history check

The criminal history check is normally the result of a search of international, national, and local records. 

It’ll include details of past criminal convictions and arrests (in most cases with a reporting period of up to 10 years), and outstanding warrants. Criminal history checks can also include searches of sex offender registries and terrorist watchlists.

Sample criminal history report
This sample criminal history check details a traffic misdemeanor.

What to look for when performing a tenant background check

Every key area of your background check can be an important indicator of the risk of proceeding with a prospective renter. 

That said, it’s important to remain focused on the objectives of running the check. A years-old traffic misdemeanor generally isn't a great cause for concern if you can see other positive elements throughout the report, such as good credit history, substantial financial liquidity, and current employment.

Also, even apparently serious red flags, like a prior eviction or poor credit rating, could be easily explained with some follow-up screening questions that provide some all-important context. 

Nevertheless, past behavior is the best indicator of future behavior, and the cost of renting to a tenant that fails to fulfill their obligations can be significant.

Therefore, especially if you manage multiple properties, it’s important to build a scalable process for performing tenant background checks that balances risk mitigation with fairness and efficiency.

How to run a tenant background check: 6 steps

Running a tenant background check involves several steps to ensure you gather comprehensive and accurate information about your prospective tenant. Here’s a breakdown of what you need to do:

Step 1: Obtain written consent

Before you begin, be sure to obtain written consent from the prospective tenant to run the background check. This is a legal requirement and helps to maintain transparency.

You should explain what will be checked and inform them of their right to dispute inaccuracies, use a standardized consent form, and keep a record.

Step 2: Gather the necessary information

Collect the required personal information from the tenant, including their full name, date of birth, social security number, previous addresses, employment details, and contact information for references. Ensure all data is accurate and up-to-date.

Step 3: Choose a background check service

Select a tenant screening service that complies with the Fair Credit Reporting Act (FCRA), or in Europe, the General Data Protection Regulation (GDPR). These services can vary in cost, comprehensiveness, and efficiency, so choose one that fits your needs.

Here are a few options you could consider:

  • Experian Connect partners with Zillow to provide tenant background checks and credit reports with quick turnaround times.
  • TransUnion SmartMove offers comprehensive tenant screening, including credit, criminal, and eviction reports.
  • RentPrep offers tailored solutions for managing multiple residential properties, including customizable workflows, screening reports, and a dedicated account rep.
  • RentSpree has a smart dashboard where you can easily manage all your tenant applications.
  • TurboTenant includes additional features for property managers in its Premium plan, like priority listing so you can optimize tenant turnaround time.

Step 4: Run the tenant background check

Submit the collected information to your chosen background-check service, complete with the renter’s authorization.

Be aware that the laws governing your landlord-tenant relationship will vary according to your location. For example, in Canada, provincial privacy laws dictate what tenant information can be collected and how it must be handled.

We take a look at some further examples below.

Step 5: Evaluate the report

Carefully review all the information provided in the background check report. Consider the tenant's financial stability, rental history, and any criminal or eviction records, as well as possible extenuating circumstances.

At this stage, you may wish to request references or ask some follow-up questions.

Step 6: Make an informed decision

Based on the information gathered, make an informed, objective decision about whether to approve or reject the tenant's application. Ensure your decision complies with all relevant laws and regulations. If you opt to reject the application, see this guide on tenant rejection letters.

How tenant protection laws can vary from state to state

Your obligations throughout the tenant application process will depend on your jurisdiction, with specific regulations affecting different aspects of the application process, such as what reports your background checks can include, application fees, and disclosure requirements.

Here are some examples:

  • City of Oakland, California
    Oakland’s Fair Chance Access to Housing Ordinance
    “prohibits rental housing providers from screening criminal history of applicants during the advertisement, application, selection, or eviction process.”
    Exceptions to this regulation include “Owner occupied units such as single family homes, duplexes, triplexes, and ADUs (Accessory Dwelling Units).”
  • Miami, Florida
    Miami’s Tenant’s Bill of Rights
    states “that a landlord cannot inquire about or require a tenant to disclose their eviction history on a rental application, but the landlord can still complete a prescreening of the tenant using other means.”
  • Texas
    Tenant rights in Texas
    stipulate that “At the time an applicant is presented with a rental application, the landlord must make the tenant selection criteria and the reasons that the application may be denied available to the tenant.”
  • New York
    The Tenant Protection Act of 2019 states that landlords are “prohibited from collecting an application fee greater than $20.00 unless otherwise provided for by law or regulation.”

Protecting your property management business

A thorough tenant background check will help you avoid the common risks of renting to a new tenant, such as late rental payments, property damage, and disruptive behavior.

However, it’s important to balance risk mitigation with a transparent and objective decision-making process that you can apply across all your tenant applications. 

Another key consideration are the laws specific to your jurisdiction, which can affect how you communicate with prospective tenants, how you manage application fees and returns, and the kinds of details you’re permitted to review within your tenant screening report.

With this in mind, no screening process is foolproof, so to protect your properties and business further, you should also consider privacy-safe property protection technology. 

Minut’s standalone sensor monitors noise and occupancy, and detects cigarette smoke and multiple other rental property risks, like break-ins and alarms. Also, it automates messages to renters, so you can manage your portfolio more efficiently and with peace of mind.