Landlords should know how to screen tenants for their rental units. They do so by running credit checks, verifying income, confirming employment, conducting criminal background checks, and verifying prior landlord and residence histories to assess whether a prospective renter will make a good tenant. Proper screening helps landlords avoid the common challenge of accepting applicants who end up being problematic.
If you have applicants for rental property and need a good tenant screening tool, we recommend MyRental. It offers a full range of financial and background checks to ensure you are selecting from the best candidates. Basic plans start at just $19.99, and applications are free.
1. Prescreen Potential Tenants
Understand how to screen tenants before they fill out a rental application. If you don’t take pets, ask if they have pets. If you don’t allow tenants with felony backgrounds, mention you run a criminal background check as part of the application process. Inform potential tenants about your screening process as some may bow out before application.
Looking into an applicant’s social media accounts can be an insightful addition to rental applicant screening. Seeing the candidate’s uncouth behavior as evidenced on their Facebook or Instagram account should throw up an immediate red flag. LinkedIn can potentially verify some of the items in their employment history.
2. Determine What Questions to Ask Potential Tenants
There are at least five areas of a person’s history and background a landlord should screen: income, employment, criminal background, credit, and previous eviction and residence history. It is important to ask probing questions when screening tenants. This is your chance to learn more about the tenant’s needs and confirm pertinent information.
As a landlord, you can screen tenants yourself. However, that involves making multiple phone calls―which can sometimes be fruitless―paying for individual credit checks or creating potential compliance issues. To comply with Fair Housing rules, be consistent with the prescreening questions you ask every tenant. Some employers and prior landlords may require the applicant to sign a release form before they give you information.
Include Co-applicants and Co-signers
Make sure you are aware of any potential co-applicants. If additional people are going to live in the unit, and are of legal age, they should be considered co-applicants and have their background checked along with the principal candidate. If the tenant doesn’t have enough credit or rental history, require a co-signer and screen the co-signer, even if they won’t live in the unit.
3. Screen Tenants by Checking Their Credit
A credit report can tell you if a prospective tenant pays their bills on time. It also allows you to assess an applicant’s debt and analyze how that relates to their income. Credit reports should come from one of the top three credit reporting agencies―TransUnion, Experian, or Equifax―or in the form of a FICO or similar score. The best credit reporting will include data combined from all three services.
Anyone trying to get credit and background information on another party must comply with the Fair Credit Reporting Act (FCRA). Credit reporting agencies (CRAs) require companies, including landlords, pulling credit data to be “accredited.” This can involve an on-site inspection of the inquirer’s office, which is intended to ensure the business is legitimate, records are secure, and the entity has a valid reason to pull others’ credit data.
4. Run Criminal Background Checks
In addition to pulling credit reports, you need to screen a renter’s background. Check state and federal criminal records to determine if the prospective tenant has a criminal history. Sex offender registries and terrorist watchlists typically are included in criminal background checks and are important to consider.
When performing a criminal background check, make sure you double-check your reports. You don’t want to deny a tenant for an incorrect report or data error. Check for correct the spelling of names and previous addresses to make sure you interpret the information correctly.
Handling Negative Results
Sometimes performing a background check will disclose negative results. That may not mean you’ll deny a rental application. However, it could mean you want to discuss the results in more detail. You can ask the prospective tenant for the circumstances surrounding the event and their age at the time of the offense. If they were incarcerated, find out the release date and what efforts they made toward rehabilitation. Ask for additional references from employers and former landlords. Most importantly, ask for verification of any mitigating circumstances.
5. Verify Income & Employment
Verifying income and employment will help you determine whether the applicant can afford the rent and if their job is stable. A common income guideline is the three-times rule. If the applicant’s gross monthly income is three times the rent, they likely can afford it.
Check with the current employer to verify their employment status, job title, and salary. Employer’s comments about job performance and history will indicate whether continued employment is likely. Job stability can be as important as the amount of salary.
6. Check Previous Addresses, Landlords & Eviction History
Verify one or more previous addresses. Assuming the applicant was a renter, you should research the history with those landlords. You want to find out what they paid in rent if those payments were timely, and whether the landlord or neighbors had any problems with the applicant while there. A current landlord might tell you they are great tenants to be free of them, so it’s important to check back several previous landlords.
Some questions to ask previous landlords include:
- Did the prospective tenant pay rent on time?
- Did they take good care of the property, with no more than normal wear and tear at move out?
- Were there any complaints from neighbors regarding noise or pets?
- Would you rent to them again?
In addition to checking with previous landlords, you also can check local housing court records to see if the prospect has any evictions and even look for judgments for damages in their court history.
7. Interview Prospective Tenant & Co-Applicants
Once you have collected the application, reviewed the tenant screening documents, and verified the tenant’s information, it’s time to conduct an interview. It’s recommended you go over the documents with the tenant to give them an opportunity to review the findings with you and provide explanations for anything derogatory. There could be potential mistakes in your findings that can be cleared up in this interview.
Federal fair housing laws protect applicants from discrimination based on race, national origin, age, gender sexual orientation, family status, or disability. Asking inappropriate questions or turning away an otherwise qualified candidate based on illegal criteria can be grounds for a potential lawsuit. It’s a good practice to use the same questions for every applicant.
8. Accept or Reject the Applicant After Screening
Once you’ve compiled the credit information and background data, and verified both income and employment, you are ready to make a decision. The sum of the compiled data will point to either an acceptance, a decline, or a tentative situation requiring a judgment call.
Tenant acceptance criteria may include:
- Income that meets or exceeds the three-times rule
- Stable work history with solid time on the current job
- Verifiable income from the current employer and/or tax returns
- Credit that meets or exceeds your criteria, which is suggested at 620 or above
- Criminal background void of any felonies or misdemeanors
- Favorable prior residence and landlord histories
In many cases, you won’t find an ideal candidate, but will rather scrutinize the “overall package” of characteristics. If one item is a bit less than ideal, but the other areas look good, you may potentially have a good candidate. You may be inclined to trust your gut about an applicant that looks bad on paper but seems like a nice person. Many landlords have suffered by giving an applicant a chance when the verifiable information told them otherwise. Look at the overall package and not just a kind personality.
Denying an Applicant After Tenant Screening
When choosing a tenant, it’s better to forego a candidate than to rent to a bad one. If there are clear indicators that a candidate is problematic, then you are within your rights to decline them. However, make sure you comply with adverse action Fair Credit Reporting Act (FCRA) laws.
Landlords and property managers are bound by the FCRA to supply proper responses if a candidate is denied due to their credit report or related factors. These responses are known as “adverse action letters,” and many small landlords and property managers are not even aware they’re supposed to send them.
Some legal reasons to deny an applicant after screening include:
- Their income can’t support the rent
- Their credit is too low or payment history is poor across several accounts
- They have a criminal history that indicates potential risk
- Employment is unverifiable, they have too little work history, or the employer indicates workplace trouble
- Prior residence research turns up evictions, judgments for property damage, unpaid rent, or problems with neighbors or law enforcement
Be prepared with supporting documentation when declining a prospective tenant and stay within the boundaries of the law. Online tenant screening provides the necessary data to ensure you are not making subjective decisions or improperly denying candidates. Some screening software will generate adverse action letters automatically; others have templates on file for clients to use.
Tips for How to Screen Tenants for Rental Property
Taking a complete application and performing background, address, and employment checks are important tenant screening steps. Other steps make the application process easier and faster for both the tenant and the landlord.
The following are four tips for how to screen tenants for rental property.
1. Customize Your Tenant Screening Questions
Create customized uniform questions for your tenant applications. Knowing if they have pets, smoke, or have negative credit upfront can help you sift through applications quickly. Asking the same questions on every application ensures you follow fair housing laws.
2. Make the Screening Process Easy for the Tenant
Having a completed application is an important step in the tenant screening process. Landlords will benefit by making the process easy and efficient for potential tenants by using online applications. When tenants apply online, landlords will receive their applications within a few minutes. This makes the approval and declination process quick so you can move forward or move on.
3. Market Your Property Online
When you market your rental property online, you have a chance to list your minimum requirements. For example, you can disclose your application fee, security deposit, and lease terms. This saves both you and the tenant time by filtering out tenants who won’t meet your requirements.
4. Use Property Management Software to Screen Tenants
Screening tenants is just one part of managing your rental property. Landlords also need to market their property to find applicants, sign and manage leases, accept online payments, and manage property maintenance requests. Good property management software, like Avail, will allow you to do all of this for one low monthly payment. You can get started with one unit for free.
How to Screen Tenants Frequently Asked Questions (FAQs)
Hopefully, this article has answered your questions about how to screen tenants for rental property. If you still have questions, below are some of our most FAQs regarding screening tenants.
What are illegal questions to ask rental applicants?
You should avoid questions regarding race, color, religion, sex, national origin, disability―mental or physical―and familial status, including children under 18 living with parents/custodians and pregnant women, as Federal Fair Housing Laws protect them. Think through each question. Don’t accidentally ask, “How old is your daughter?” or “Where are you from?”
How do I find renters for rental property?
There are many ways to list your rental property, including sites like Zillow and Rent.com. Many property management software companies offer free listings when you’re a member. Check out our best property management software article for more in-depth information.
How do I choose between rental applicants?
If you have two or three good applicants, weigh the overall application package of each applicant. One applicant may have high income, but you notice they move every year or two while an applicant with lower income that can afford the unit may have a long-term tenancy history. Decide which is more important to you—long-term tenants or tenants who are high earners.
When learning how to screen tenants, you should run credit checks, verify income and employment, conduct criminal and related background checks, and investigate prior landlord and residence history on all potential residents to determine whether prospective renters will likely make good tenants. Tenant screening software and services can help streamline the process.