If you’re a landlord, running a background screening on your tenants is a necessity. Landlords can decide if overlooking the past history is worth it, but before you do, you need to understand the top renter screening warning signs.
Evictions won’t always show up on a credit background check. They’ll only show up if an outstanding judgment for unpaid rent is added to the applicant’s credit report. Therefore, it’s important to screen specifically for evictions with a full tenant screening report. Thorough reports include evictions and judgments in the applicant’s history, pulled from county housing court databases across the United States.
2. Rental History
You should also review the tenants’ rental history. On your rental application, include a section where applicants list their rental history for at least the past three years. Compare it to the history in the screening report. If addresses are missing or different from the application, that’s a red flag.
Of course, tenant screening services can make mistakes, so if there’s a discrepancy, ask them about rather than making assumptions. There could be a good reason. Military families move a lot, and some people’s work requires them to relocate. You’ll need to decide if you want to find long-term renters. Some landlords don’t mind renting to a tenant who states upfront that they may move at the end of their one-year lease agreement or need to move in six months. Ideally, however, most landlords prefer long-term tenants.
3. Employment History
Frequent job changes or gaps in employment may speak to an applicant’s inability to pay rent consistently. Meanwhile, in times when unemployment rates are high, it might be difficult to find tenants with no employment gaps or frequent job changes, so this shouldn’t necessarily be a disqualifier.
Ask the applicant to explain gaps in employment like a parental leave of absence. Ask how they paid rent and other bills at that time and, if they have a plan, should they again face unemployment. If the gaps are reasonable, and you decide to rent to the applicant, ask the applicant to provide a cosigner on the lease and do a background screening on them as well.
4. Self-employment Information
If an applicant is self-employed, verify proof of income, including three years of both business and personal tax returns, bank statements, and income. Verify their employer identification number (EIN) and ask for other proof of being in business. If they have been in business for fewer than three years, review employment history in addition to business history. You’re looking for consistent income to make sure they can pay rent.
5. Credit History & Report
Don’t focus solely on the credit score since scores don’t give a complete picture. Instead, focus on the tenant-applicant’s payment history. Look for timely monthly payments to their creditors. Examine public records for past judgments and liens. You may consider overlooking a one-time major medical expense from years ago. Look for a pattern of paying every bill on time, and if there is one late payment, it doesn’t have to be a deal-breaker.
6. TransUnion Resident Score
The TransUnion Resident Score is designed by TransUnion to screen tenant-applicants. It uses the same information that’s factored for a FICO score and analyzes resident records and rental history with a score ranging from 350 to 850. The higher the score, the greater likelihood of on-time rent payments, long-term tenancy, and satisfactory rental history. A low score could be a renter screening warning sign.
In addition to credit history and scores, landlords should also screen applicants for prior evictions. According to TransUnion, a tenant with a prior eviction is almost four times as likely to have another eviction than one without a prior eviction. Check the state laws where your rental property is located to determine if prior evictions can be a deciding factor in rejecting an applicant for housing.
7. Financial History
Verify the applicant’s reported income to make sure income is as reported on the application and that the applicant has enough consistent income to afford the rental. Typically, landlords look for 33% of the applicants’ monthly income to cover rent. You can verify income with pay stubs, W2s, bank statements, and tax returns.
8. Payment History
Ask for the three most recent months’ history of utility bills in addition to the credit background check and rent receipts or canceled checks for six months’ rent. These typically don’t show up on a credit report unless the bill went to collections, or the landlord moved to evict and received a judgment in housing court.
9. Federal, National, State & County Convictions
Federal and national conviction background checks differ. Federal screening covers federal jurisdictions while national screenings search a large collection of nationwide databases. County criminal history, meanwhile, is found through county courthouses.
State-level convictions are found searching by county in district and superior court logs and are sometimes available online. Local newspapers also sometimes publish district and superior court logs. Good tenant screening services usually cover these, and many county courthouses now have online searchable databases if you want to verify.
10. Sex Offender Registry
Screening for national convictions will reveal if the applicant is on the national sex offender registry and whether he or she is a Level 1, 2, or 3 sex offender. The levels indicate the severity of the offense and whether the offender is a high risk to reoffend. Level 3 sex offenders are the most likely to reoffend and Level 1 least likely.
All levels are public record, but the National Sex Offender Registry online database only releases names and current addresses of Level 3 offenders. For information on Levels 1 and 2 sex offenders, you need to contact the applicant’s local police department. All levels of sex offenders are required to register their addresses with the local police department.
11. Aliases & Other Names
It may seem obvious, but when doing any kind of tenant background screening, make sure you know their full name. If someone tells you their name is Jon, make sure it’s not Jonathan since criminal records typically are connected to a full name and not a nickname. Also, ask for past names since marriages and divorces, among other things, can change people’s names.
Verify dates of birth by viewing driver’s licenses, government-issued photo IDs, and birth certificates to make sure they match. Make sure that names, dates of birth, and Social Security numbers all match up. Discrepancies may indicate that someone is trying to run a scam but check with the tenant to make sure.
12. Terrorist Watch Lists
The Office of Foreign Assets Control (OFAC) keeps international records of people on terrorist watch lists. Online tenant screening services search this office’s records for applicants who may be tied to terrorist groups or considered a threat to national security. Occasionally, applicants have erroneously had terrorism connections show up on a background screening because of a similar name. To avoid this, call the OFAC hotline and make triple sure.
Renter Screening Warning Signs Not in Reports
Using a tenant background screening service is the fastest and most reliable way to check for renter screening warning signs. Some landlords may wish to enhance their screening by doing their own research to find red flags that don’t show up in a report, but it should not be relied on solely since finding the right information is challenging. Social media accounts, online newspapers, and calling previous landlords, are additional ways to get information on an applicant that may not be in their background check.
You can find this information by doing a little research using an online search engine like Google. Type in their name with keywords like Facebook, Instagram, or Twitter, “arrested,” or by adding the previous addresses listed on the application with their name. For example, “John Smith, Washington, D.C., Facebook” or “John Smith, Bradenton, Florida, arrest.”
To help ensure you get the information you need prior to renting, you may want to consider using a tenant screening service. Avail offers tenant background checks that include all 12 renter screening warning signs in a clear and easy-to-read report. This service also lets do-it-yourself (DIY) landlords sign leases and collect rent on any device, and the first unit is always free.
Online tenant screening services abide by the Fair Housing Act, do not discriminate against applicants in protected classes, and are the best option for selecting tenants for your vacancies to avoid any discrimination charges. If you also conduct your own research, make sure you’re using good and fair judgment and not discriminating against anyone based on race, color, national origin, religion, sex, familial status, or disability.
We’ve provided you with the top renter screening warning signs to look for in a prospective tenant. Some red flags may be immediate deal-breakers, and others you may decide to disregard. Use your best judgment and look at the whole picture when deciding.