Your life as a landlord can seem straightforward to the outside world – buy a property, get it into rent-ready condition, find a tenant, sign a lease, and collect rent each month. When a tenant moves out, lather, rinse, repeat. Unless you have taken steps to protect you and your property at the outset of the tenant relationship, you could be in for much more than you bargained for, and it's anything but a dull ride.
An essential preliminary step is to thoroughly review any potential tenant’s history as a renter. Most landlords do a background check after the potential tenant sees the rental unit and completes their application. As a landlord, you need to be sure – as much as possible – that anyone you rent to doesn’t have a history of any serious behavior problems and that they’ve demonstrated responsibility in their relationships with prior landlords.
It's important to screen tenants carefully to prevent potentially problematic tenants. For example, avoiding troublesome tenants from becoming residents before they can create headaches and cost you money because they damage your property or fail to pay rent.
How to check a renter’s history
A proper tenant screening process helps ensure applicants are responsible and likely to adhere to the responsibilities outlined in your lease.
Your screening process should cover:
- Credit history and score
- Income availability
- Employment history
- Rental history report
- Eviction record
- Criminal history
RentSpree's tenant screening tool is an excellent resource to help you check a renter’s background. This tenant screening tool is free for landlords to use.
The process is simple, landlords and property managers send a link to their applicants, who fill out the form online and pay a small fee to submit their application. After the application is processed and the report received in the system, you’ll get a notification to view the full report. The report consists of their credit history and score, background check for criminal history, and access to eviction history from all 50 states.
When you’re looking for the ideal renter, you want the basic information and an understanding of what the reports reveal and how they affect tenant credibility.
Here are six ways to check a renter's history to see if they’d be a good fit for your property.
Review the rental record and contact previous landlords - When you speak directly with previous landlords and property managers, you learn if the tenant left behind a damaged property, broke their lease, and had a timely record of paying rent. The tenant’s relationship with past landlords will say a lot about what you can expect in terms of their character and behavior.
If they are first-time tenants and don’t have a rental history, you will need to use other verification methods to get a sense of their likely responsibility. Without much “hard” information, you may want to get a co-signer for the lease.
Examine the employment history - If the applicant has a steady job, you can reasonably surmise that they have a steady income to cover the rent on time. Job-hopping doesn’t necessarily mean they won’t cover their rent payments but could mean they struggle from time to time. Talk with their employers to determine if there are any red flags – be aware that legally, employers can only verify dates of employment, but you may be able to read between the lines if there are problems.
Review their W2s and tax returns - Your best applicants are those who can comfortably afford the rent you charge; HUD guidelines suggest that rent should not be more than 30% of an applicant’s gross pay. Examine their take-home pay and tax returns (for those who may not have a W2 job, such as independent contractors or those who work cash jobs) to see if their income meets the threshold for the rent you charge.
Look for any prior evictions - If your applicant was evicted from a prior rental situation, this information is part of the public record in most states (New York State is the only exception.) Evictions show up in the county court system where the rental is located. Review the record to see why the landlord filed the eviction and learn if the landlord collected any of the money owed by the tenant. Eviction doesn’t necessarily disqualify an applicant but creates a reason for you to ask for more money upfront. Many landlords ask for a security deposit, first month’s and last month’s rent to cover their risk. You could ask for a larger security deposit in some states, but you’ll want to refer to your state’s landlord/tenant law for guidelines.
Evaluate their credit history and score - With your applicant’s permission, you can purchase credit history information from any of the three major credit reporting agencies – Experian, TransUnion, and Equifax. These agencies track credit data – when an applicant applies for new credit, how much of someone’s credit is available, and their record of making timely payments. If you work with RentSpree, the tenant screening tool provides credit reports from TransUnion; one advantage to the tenant is that RentSpree’s query with TransUnion does not affect a renter’s credit.
Along with the credit history and score, you’ll also receive leasing recommendations to make your decision-making easier. The leasing recommendations consist of an overall score based on the other background, credit, criminal, and income factors. This score can help you determine the amount of risk you may be taking by approving this particular applicant.
Review their criminal history - Criminal history is also public information, searchable on court websites. Consider the crime and how it may affect the applicant’s tenancy. In most states, a potential tenant’s criminal history can’t disqualify them from a rental unless their record suggests they could be a danger to themselves or others.
Save time and money by checking a renter’s history
Conducting a comprehensive check on a renter’s history can be time-consuming. However, it's worth all the upfront time and money you put into it because an eviction can cost more than a year's cash flow.
Example costs for the eviction process:
- Filing fee – $80–$100.
- Sheriff or process server's fee to deliver the paperwork – $100 +/-.
- Lawyer fees – $250 +/- per hour.
The eviction process can take anywhere from 30 to 60 days. You could be looking at a $5,000–$8,000 loss, especially if you need to pay for repairs to any damages, which often come with an eviction — an amount you would never have to lose with a properly screened tenant in place a loss of rent. Depending on your rent, you could be out another $400–$2000 per month.
As a landlord, you can choose to go with your instinct and accept a rental application without checking a renter’s history. Taking a few moments to verify can save yourself a lot of worries, time, and money in the long run. The tenant screening tool from RentSpree helps you make a reliable decision. It ensures a thorough and speedy process, and the applicant pays the fee.