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How to Run a Background Check on a Tenant

A background check can provide valuable insight into a tenant’s criminal, credit, rental and employment histories. The process can help you make an informed decision on who to rent to and who to avoid.

Keep reading for a look at why it’s important to conduct a background check on a tenant, things to look for in a tenant’s information, how to run a background check on a tenant and legal considerations to be aware of.

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Why is it important to conduct a background check on a tenant?

Conducting a background check on a tenant is a crucial step in the rental process, and you shouldn’t rent out a property without one. A thorough background check allows you to verify a rental applicant is who they say they are and increase your odds of choosing a tenant with a history of paying rent in full and on time.

However, note that to run a background check on a prospective tenant, you’ll need their signed authorization to do so. You’ll also probably need to engage the services of a background check company that conducts tenant screening in accordance with the provisions of the Fair Credit Reporting Act (FCRA).

A background check can help you avoid tenants who have a criminal history or have had trouble paying their bills. Identifying these red flags early in the process through a tenant background check can protect your property and protect you as a landlord.

What to look for in a tenant background check

When conducting a background check on a prospective tenant, there are a few crucial categories of information to look into. These include the tenant’s criminal history, credit history, previous rental history and employment history. Here’s a closer look at each.

Criminal history

A tenant’s criminal history can be an important factor in determining whether they will make a suitable renter. Look for any convictions or arrests in their history, especially in the recent past, and review the nature of the crimes they have committed. As with the other kinds of information on this list, someone’s criminal history can be obtained through many consumer reporting agencies (CRAs), local, state or federal law enforcement, or various online screening services.

Credit history

A tenant’s credit history is another key factor in determining whether they’re likely to pay rent on time. Look for negative marks on the tenant’s credit report, such as bankruptcies, collections, late payments, liens or unpaid debts.

Do note that you’ll need the prospective tenant’s signed authorization in order to obtain their credit report. Once you have that, you can run a credit check on a prospective tenant through one of the three major credit bureaus (Equifax, Experian or TransUnion), through certain types of property management software or via tenant screening companies.

Rental history

A tenant’s rental history can indicate their ability to pay rent on time and take care of the property. Pay special attention to any incidents of broken leases, past evictions or complaints from previous landlords or property managers. You can obtain this information from most background check sites or directly from the tenant’s previous landlords or a professional screening service report.

Employment history

A tenant’s employment status is an important factor in determining their ability to pay rent.

Traditionally, the rule of thumb for tenants is that their rent should be no more than 30% of their monthly income. While rising rent prices have made this metric obsolete in many locations, knowing that a tenant is gainfully employed can show you they have the means to afford the property they’re applying to rent.

When reviewing a tenant screening report, look for any gaps in employment or inconsistencies in their job history. Though some landlords or property managers may choose to rent to tenants with irregularities in their employment history, it’s not uncommon for landlords to ask for additional deposits or bank statements to show that the tenant has enough money to pay rent if there is a lapse in employment.

Though you can obtain this information directly from the tenant’s previous employers, using a professional screening service may be best. The best background check companies can run employment reference checks that will confirm these details, among others, and can help you make more informed decisions when choosing tenants.

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How to run a background check on a tenant

Running a background check on a tenant can be a complicated and sometimes time-consuming process, but it’s a crucial step. If you’re a landlord, doing your homework and exercising due diligence is important to protect yourself and your investment.

There are, however, legal requirements you should be aware of. Here’s a look at the necessary steps to follow when conducting a background check on a tenant.

1. Obtain written consent from the applicant

Federal law requires anyone conducting a background check in order to make housing or employment decisions to obtain written consent from the subject of the check.

The consent form should be part of the application form and include the applicant’s name, most recent address and date of birth. It should also include an explicit statement that the applicant is aware that a background check will be conducted, and that it will include a criminal background check, eviction history and credit report, and that the prospective renter has been apprised of their rights regarding the matter.

2. Gather information from the applicant

After obtaining the applicant’s written consent, gather as much information as possible from the prospective tenant. Though this information is voluntary, a complete rental application should include a tenant’s full name, Social Security number, date of birth and current address, which is enough information for a background check to be started.

In most places, you can also ask about their employment and financial status, though it’s important to review any applicable local or state laws to ensure you’re staying within the letter of the law.

3. Use a professional screening service

The best way to ensure that a background check is lawful, comprehensive and accurate is to use a professional screening service. These services have the specialized experience needed to conduct tenant background checks.

4. Run a credit check

As a landlord, you’re legally allowed to run a credit check on a prospective tenant with their permission. The Fair Credit Reporting Act law allows landlords to obtain consumer reports like credit and background checks as long as they have a permissible purpose and use appropriate consumer reporting agencies to conduct their checks.

The FCRA also states that the subject of the investigation has a right to a copy of the results and should be given the opportunity to correct or dispute any findings. Credit checks must be obtained directly from the major credit reporting bureaus or through an FCRA-compliant background investigations service to be used for tenant screening purposes.

5. Verify information

If you use a background check service, you can be reasonably confident in the accuracy of the reported information. However, if you decide to verify some or all of the information provided by the prospective tenant, you can call previous landlords or employers to confirm the tenant’s rental and employment histories.

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Legal considerations involved in background checks on tenants

There are federal laws that protect tenant rights, as well as state and local laws that regulate tenant screening and the steps that you’re legally allowed — and required — to take as a landlord. Here’s a closer look at some of these considerations.

Federal laws that protect tenant rights

The Fair Housing Act is a federal law that protects potential tenants from discrimination based on race, color, religion, gender or national origin.

Be aware of these legal requirements, as failure to uphold them could result in civil liabilities or fines.

State laws that regulate tenant screening

States have different laws regulating tenant screening. These laws can often impact how far back the background search can go and what type of information can be reported. Make sure to familiarize yourself with the laws in your state to ensure the search is compliant with local laws.

To be sure you don’t run afoul of the law during the tenant screening process, consider consulting a local lawyer who is experienced in the landlord-tenant laws that may apply to the location of your rental property.

How to run a background check on a tenant FAQs
What do I need to run a background check on myself as a tenant?
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You can run a background check on yourself as a tenant by taking the same steps a landlord would take. You can request a copy of your criminal records from state or local police, and you can obtain your public records by contacting state and county courthouses.

You can also obtain copies of your credit report from the three major credit reporting agencies or via AnnualCreditReport.com, a website owned and maintained by the federal government that provides you with one free copy of your credit report per year.
Do I pay for the background check as a tenant or does the landlord cover the cost?
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Though the landlord or property management company is liable for the cost of a background check, this is typically included in application or processing fees. If you have any questions about additional expenses you may be charged in connection with a background check, ask your landlord to make sure you know who is covering the cost.
What is the best way for me to run a background check on myself as a tenant?
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You're free to perform a background check on yourself, but the best way to be sure you uncover everything a professional agency would find is to use a professional screening service. These services are experienced in conducting tenant background checks and can provide the most accurate and up-to-date information. This information can help you identify any red flags or problem areas you may need to address or explain to a potential landlord.
How can I ensure efficient and effective tenant background checks?
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Your best bet to ensure a background check is worthwhile and complete is to use professional tenant screening services. These companies are more likely to find results that you may not know how to access. When you factor in the cost of your time, they can be the most cost-effective method to accomplish a tenant background check. The professionals running such services will also be familiar with the laws in your state that regulate tenant screening, helping you avoid illegal landlord questions, among other potential pitfalls.
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