How To Run A Background Check on Tenants
There was a time when all you needed to apply for a rental property was a handshake and the required deposit. Now it's important for rental agents, property managers, and landlords to understand who they’re renting to and how likely they are to be a suitable tenant. Learn how to run background checks on tenants and find out how they can provide peace of mind to you and your neighboring tenants.
As a landlord, you want to ensure you’re leasing your rental properties to tenants who will pay the rent on time and who are reliable and trustworthy. While it would be great if you could trust everyone, unfortunately, that’s not always the case.People can put on a show and pretend to be the perfect neighbor, when in reality, they are hiding things from their past that may be a red flag to future property managers. The tenant screening process is the perfect time to fully assess who your potential renters really are and make sure they are a good fit. In addition to online rental application forms and credit checks, it’s crucial to run a background check on prospective renters. So, how do you run a background check on a tenant? Here’s everything you need to know about background checks and tenant screenings.
What is a background check and why is it important?
Before we dive into how to run a background check on tenants, let’s briefly define what it actually is. Simply put, a background check is an extensive overview that shows a person’s criminal, eviction, education and employment history and can be used to verify and screen prospective tenants. Background checks show:
- Eviction history
- Criminal records
- Public records
- Verification of identity
- Government watch list status
As a landlord, it’s in your best interest to lease your rental properties to people who will pay the rent on time, contribute to the rental community and keep your property clean and in mint condition. While you can’t guarantee anything, background checks can help you learn more about future renters and give you a detailed insight into their past. If a prospective tenant failed to mention something from their past, like a past eviction, it’ll likely show up on their background check, giving you more information before you decide if you’ll allow them to sign the lease or not.
How to run a background check on a tenant
Now that you’ve decided to include a background check as part of your tenant screening process, let’s look at everything you need to do to get started:
1. Get signed consent
Before you can run a background check on a tenant, you must obtain written consent and approval from the tenant. It is illegal to run a background check if the renter is unaware you’re doing so. You can include a section in your rental application that explicitly asks for their signature and consent. Or, you can create a separate form for them to sign asking for permission.
2. Obtain tenant information
To run a background check, you need the renter’s name and social security number. Obtain the necessary personal information so you can move forward with the tenant screening process.
3. Choose an approved background check service
There are a variety of background check services to choose from when screening a tenant. Compare your options and make sure it’s approved by the Federal Trade Commission. Once you’ve received consent, you can pick your background service company and run the report.
4. Decide how you’ll pay for the background check
Background checks can cost anywhere from $15 to $40, depending on the service you use. You’ll need to decide if you’ll foot the bill for this or if you’ll require the prospective renter to pay the fee. One way to get this covered is to include this fee as part of the rental application cost.
5. Make a plan ahead of time on how you’ll use the information
Before you see the results of a background check, it’s smart to have a game plan in mind on what you’ll do with the information and how it’ll affect your decision. For example, will teenage misdemeanors be a deal-breaker? Or, will you only reject sex offenders, people who’ve been evicted, or hardened criminals? To be a fair landlord, you’ll want to know your boundaries and hold everyone accountable to the same standards, otherwise, you can face discrimination issues in the future.
6. Know the laws
To avoid discrimination and be compliant with the Fair Housing Act, it’s crucial to know the laws and understand what you can and cannot do. For example, you cannot run a background check simply because of someone’s race or gender. Also, you cannot run a background check and use it as a cover for rejecting someone based on sexual orientation or age.
Final thoughts on background checks
Background checks typically will have results back to you within one day. However, in some instances, it’ll take longer. By understanding how to run a background check on tenants, you’ll have more information about potential renters, keep your rental community safer, and give yourself total peace of mind.
