The average cost of an eviction is $3,500 up to $10,000, and it takes at least 3-4 weeks for the process to run its course. Even tenant turnover can cost up to $1,750 per month – that’s why it’s important to perform thorough background checks on your potential tenants.
Don’t “trust your gut” or “judge a book by its cover”. Using due diligence and a reliable tenant screening service will save you from damaged property, lengthy vacancies, and ultimately leave more money in your pocket.
Keep reading for tips on background and rental history checks, how to run a credit check on a tenant, and what information to look for in these reports.
What is tenant screening?
Tenant screening is a process to evaluate possible renters. Standard tenant screening services provide credit history details, criminal background, and eviction checks. Additionally, you can also perform a rental history screen and get some references from current or previous landlords.
For landlords or property managers, it helps assess whether or not the tenant will abide by the rules of the lease or rental agreement and care for the property. Plus, you can identify potential risks upfront, such as non-payment of rent, noise complaints, or poor credit scores.
Before jumping into “how to run a background check on a tenant” let’s talk about what you can do to set yourself up for success, including creating your ideal tenant profile, advertising a quality listing, and pre-screening tenants.
Pro tips to remember:
- Tenant screening process: Set up a repeatable process you can follow every time you need to find a new tenant for your property.
- Online pre-screening: Google your tenant’s name and email to see what you can find online in their social profiles. You can confirm their identity online. Use LinkedIn to see if their employer records match. Use Twitter to see if their names come up in news reports.
- Phone pre-screening: Pre-screen applicants on the phone after they apply and ask tenant screening questions about their job and income, rental history, and why they’re moving.
- Background and credit check: Make sure your tenant screening report includes a criminal background and credit check.
- Red flags: Look for troubling signs like if a tenant wants to move in “right away” without seeing the apartment, doesn’t have sufficient proof of income, or wants to skip the “background check.” These are warning signs of potential tenants you may want to avoid.
- Employment verification: Don’t rely on employer contact numbers tenants provide. It’s easy for a friend to pretend for them. Choose a tenant screening service that verifies employment and income.
- References: Ask for 1-2 references, including a previous landlord. Verify the previous landlord’s name by asking your realtor or lawyer to do a land registry check on the addresses belonging to past landlords.
How to screen tenants?
Imagine the tenant screening process as a funnel—start with a wide opening (or pool of rental candidates), filter out risks, poor fits, and personal (legally acceptable) factors until your perfect tenant comes out the bottom.
Step 1: Create your ideal tenant profile criteria
Before background and rental history checks, pre-screen potential rental candidates by determining your ideal tenant criteria. Set expectations to filter out candidates before they view the property or apply to rent it out.
Income-to-rent ratio
Experts recommend your tenant’s gross salary be equivalent to three times the monthly rent (variable by location). Let’s say you believe the prospective tenant should be making around $70,000. That means, by charging $2,000 a month in rent, the tenant is required to make $6,000 per month (3 x $2,000). If you multiply that by 12 months, you end up at a $72,000 annual salary.
Self-reported income may not be accurate, and you’ll have to spend time chasing down former employers to verify income. Baselane’s tenant screening reports include secure bank-verified income, including the income source (their employer), pay frequency, and verified net earnings.
Rental history
If your rental property is in an area near a college, university, or known as a starter area for new immigrants, getting prospective tenants with rental histories may be difficult. You can require a co-signer in your lease, but put that in your rental listing.
Criminal activity
Can landlords discriminate against felons? The US Department of Housing and Urban Development (HUD) is seeing more landlords discriminate based on criminal backgrounds. You can deny an application based on criminal history. However, asking questions about upcoming holidays, language, or what country they were born in is discriminatory.
You can’t discriminate against seven protected classes listed in the Fair Housing Act, they include:
- Race
- Color
- Religion
- Ethnic background
- Gender
- Familial Status
- Disability (mental or physical)
Our tenant screening tool helps you avoid any confusion about what you can and can’t ask. It checks 1.8 billion criminal records across national and local databases and 2,500+ jurisdictions.
Step 2: Advertise a quality rental listing
For a quality rental listing that helps you find great tenants, set expectations with clear guidelines about the property. You can weed out tenants who don’t meet your qualifications or don’t like your “rules”.
- What is the monthly rent? With a beautiful unit and no price, expect a flood in your inbox from people who think they’ve found gold and want to act fast.
- What are the basic details of the property? Include rooms, bathrooms, and amenities (laundry, dishwasher, etc.).
- Is a security deposit required? The first month, first and last, or none at all. Know that in some states, you can’t ask for more than 1.5 months.
- Will a credit check be required? If so, who’s paying for it?
- Will you run a tenant background check? When running a tenant background search, different details may be provided, so be explicit and list whether it will include eviction reports.
- Do you want references from previous landlords? To check if they were a good tenant (paid on time, no property damage, etc.).
- Are pets allowed? As a landlord, it’s your right to have a no-pets policy unless it’s an emotional support animal. Under the Federal Fair Housing Act, you can’t discriminate against people with disabilities who require a support animal to function.
- Is smoking allowed? Whether cigarettes or marijuana, create clear rules around smoking. A landlord with a no-smoking policy in the lease can terminate the tenancy or evict the tenant if they break the rules.
Describe the area in detail, such as nearby grocery stores, restaurants, and coffee shops. Talk about the neighborhood—is it quiet or a party? What’s the average age (e.g. are there families, young singles, or seniors)? Finally, use high-quality photos that showcase your rental’s best features.
Step 3: Pre-screen tenants over the phone before showing the rental
It can seem like an unnecessary step, but it’ll save you time since you’re avoiding the tire kickers, those who don’t meet your other criteria above, and you’ll make fewer trips to and from the property itself.
Before the tenant credit and background check, you can ask prospective tenants some preliminary questions, which will help you better understand who they are and if you want them to move in.
While it should be a casual conversation, now is the time to start keeping records of potential applications to refer back to when needed. Consider using Google forms or sending the questions for them to answer via email so you always have a copy.
Here are some questions to ask potential tenants:
- Are you currently renting? Where? How long have you been there?
- Does your landlord know you’re thinking of moving? Have you given notice?
- Why are you looking for a new place to live?
- Is there a date you’d like to move in?
- What kind of work do you do?
- What’s your annual income?
- Are you willing to sign a one-year lease agreement?
- What’s your budget for rent?
- Can you pay the security deposit?
- How is your credit score?
- How many people will live with you (e.g. partners, parents, children)?
- Have you ever been evicted? Faced bankruptcy?
- Any issues I should know before running a background check?
With that information, you can decide if you’d like to go ahead with a tenant background search.
How to perform a background and credit check?
Getting a comprehensive background check is easy (and free) with Baselane. Simply sign up and enter the tenant’s email to send them a screening request — it takes 2 minutes. They can authorize a tenant screening background check and credit report (don’t worry, it won’t impact their score) and fill out the application online with the following details:
- Full name, phone number, date of birth, address, and social security number (SSN)
- Scan of driver’s license or other government-issued ID (supports 16,000+ ID types and 200 countries)
- Employment details and pre-tax income (verified by connecting a bank account or payroll provider, or uploading bank statements, pay stubs, and W2s)
- Previous addresses (at least 2 years)
Once the application is complete, Baselane will verify their information and send you a comprehensive screening report, including a credit report, criminal background check, housing history and any past evictions, and an income report, plus the tenant’s rental application and identity verification.
That Actually Works
Comprehensive reports you can trust, delivered in minutes.
How to evaluate a tenant's background check and credit report?
Understanding what’s included in a background check and how each applies to you will help you find better tenants and create better pre-screening policies for your rental business.
What you’ll get with Baselane's credit report
A credit report gives you insights into your applicant’s financial history. Knowing whether they’ll be able to routinely pay rent on time is critical to your business. Baselane’s tenant screening service delivers a full Equifax credit report covering:
- Consumer information: Confirms basic information like their name, address, SSN, and employment details.
- Credit score: Vantage 4.0 score based on data from over 250 million scoreable consumers. A credit score shows you how financially responsible your prospective tenant may be. A credit score is on a scale from 300-850, and the higher the number, the more creditworthy they are. There are 5 factors that go into a credit score:
- Payment history (how well they make payments over time)
- The total amount owed/credit availability/utilization (total amount of all debt with the amount of credit available to them)
- Length of credit history (their oldest credit)
- Types of credit (e.g. credit cards, student loans, etc.)
- New credit inquiries (e.g. new loans)
- Credit accounts: Includes the types of accounts (credit card, mortgage, student loan, vehicle loan, etc.), the date those accounts were opened, credit limit or loan amount, account balances, payment history, and past due accounts.
- Credit inquiries: Companies or individuals that requested the tenant’s credit report. An inquiry can be “hard” or “soft”. A hard credit inquiry is when a potential lender checks credit before a loan approval. A soft inquiry is when someone checks their own credit score, a landlord performs a tenant criminal background check, or an insurance or credit card company “prequalifies” an applicant. Only hard inquiries have an effect on the applicant’s credit score. Baselane’s credit report is a soft inquiry.
- Bankruptcies: Includes the dates bankruptcy was filed and reported, the type of bankruptcy, and case numbers and codes. Bankruptcies generally remain on credit reports for 7-10 years.
- Collections accounts: Accounts that have been turned over to a collection agency, including accounts with banks, retail stores, cable companies, mobile phone providers, doctors, and hospitals. Includes account numbers, original amount, and balances.
- Fraud indicators: SSN match flags could indicate identity theft or that a card was reported as lost or stolen. Compare and contrast the details from the report to the details provided in the rental application. If anything doesn’t line up, ask for reasons why.
Read our blog for more tips: 5 Things Landlords Should Check on a Credit Report
National criminal background report
A criminal background check includes any offenses at state and federal levels. For the safety of your neighborhood, other tenants, and yourself, run a background check that includes criminal history.
Baselane’s criminal report includes results from over 1.8 billion criminal records across national and local databases and 2,500 jurisdictions. It covers any aliases and case details for offenses, including court and incarceration, sex offender, probation, parole and/or release, and traffic records.
While most results are available within minutes, some federal, state, or local laws may limit our ability to get some records for some states. You cannot deny an applicant based on an arrest without conviction. Be prepared to make a case of why a committed crime is a threat to your property or the safety of residents and neighbors.
National eviction report
Evictions are costly and time-consuming, two pains no landlord wants in a busy schedule.
Not all eviction reports are created equal, though. Baselane uses the largest database of U.S. housing court records to deliver a complete eviction history, including the court and filing date, judgment amount, case number, plaintiff, and notice type. Because Baselane’s tenant screening service is built for landlords, it looks at the biggest indicators of evictions and reduces your risk.
Income insights
A tenant volunteers their income, which may not be accurate. Baselane’s tenant screening process asks applicants to choose an income and employment verification method:
- Bank verification: Securely connect a bank account through Plaid.
- Document verification: Upload recent bank statements, pay stubs, and W-2 forms, all verified through Ocrolus with 99% accuracy.
- Payroll verification: Verifies payroll credentials through Pinwheel and Atomic, covering 85% of US workers.
Baselane’s income report provides verified income sources and net earnings, pay frequency, monthly gross income, and debt-to-income ratio. This gives you all the information you need to determine if your tenant can afford rent without any additional paperwork or calling employers.
Final Thoughts
Tenant screening can give you all the details you need if you do it the right way. Don’t settle for surface-level screening or skip steps because you have a “good feeling” about an applicant. Baselane’s advanced tenant screening software provides 360° profiles to help you find reliable renters and make confident leasing decisions with just a few clicks. Screen for free today!
FAQs
What makes a good rental listing?
A good rental listing includes great photos or video, a catchy headline, the basics of the property, unique features, and in-suite amenities, along with clear and concise policies on rent, fees, and damage deposits.
It also includes your definitive policy on things like pets and smoking, as well as a call-to-action and an idea of what the next steps are to complete a prospective tenant’s rental application.
Where should I advertise my property?
Advertise your property on social media, MLS, and rental listing websites such as Zillow, Rental.com, Apartment.com, and more. Don’t be afraid to tell your network, including previous tenants, that you’re looking to rent out the space. If you want to generate buzz, get your property featured on real estate news websites for some free or paid cheap publicity.
What are some tips for attracting potential tenants?
To attract your ideal tenant, decide who they are and accentuate the parts of your property that would be appealing to them or solve their pain points. You can also attract tenants for your rental properties with an affordable price and some in-demand amenities such as high-speed internet or underground parking. Opening your place to pets also increases your prospective renter pool.
