While a complete tenant screening process is much more than just running a background check, this individual step is arguably one of the most important. It also happens to be the least intuitive for those who have never done it. Below is a step-by-step guide to running a prospective tenant background check.
Step 1: Gather Necessary Information
The easiest way to get the information you’ll need to run a background check is to have the prospective tenant fill out an application. This application is also a chance to collect references, income info, etc.; however, the information we want for this aspect of screening specifically is the tenant’s:
- Full Name
- Date of Birth
- Social Security Number
- Driver’s License Number
- Obtaining a copy is even better so you have record of the issuing state as well.
- Current & Previous Addresses
- Coinciding dates of residence will also be helpful later on when analyzing the findings.
Charging an application fee is usually a good idea if you’re running background and/or credit checks. These reports are not free and in the event the tenant doesn’t pass your requirements, you’ll be throwing money away. To help you decide how much to charge as an application fee, know the background check alone can cost $50-60+. Application fees are common and will not deter serious renters.
Step 2: Find an Approved Tenant Screening Company
The key word in this step is APPROVED. According to the Fair Credit Reporting Act, you need to use a consumer reporting agency that meets their requirements. If you use an unapproved agency and it alters the results of the background check, it could lead to law suits from the prospective tenant. To make it super easy for you, the Consumer Finance Protection Bureau provides a list of approved consumer reporting agencies on their website: http://files.consumerfinance.gov/f/201604_cfpb_list-of-consumer-reporting-companies.pdf.
Step 3: Run the Report and Double Check the Findings
Running this background check should be able to show you all sorts of information such as criminal records, court housing records (for things like evictions and lawsuits over property damage), and will often show you whether or not the prospective tenant is on the federal sex offender registry.
While all of this information can be incredibly helpful, it’s important to really look at the report. There have been rare instances of mix ups for individuals with common names, birth dates, etc. To give you a real example, there was a man who was told by his previous and current landlords that his name popped up on serious crimes that were committed. Luckily, upon further inspection, they noticed the crimes listed were committed over 10 years before he was even born. This is a great example of why it’s so important to look through dates, names, and other information to avoid confusion. The technology behind the reports isn’t perfect, so don’t just take it for face value.
If your property has been vacant for some time, your eagerness to fill it can cause you to ignore seemingly small steps like background checks. However, we strongly encourage you to use the resources available to you to keep your rental community and property safe. Running this type of screening procedure (along with the others we wrote about in How to Successfully Screen a Tenant) can immensely help you find truthful tenants who will respect your rules. These types of people will be much more of a pleasure to deal with. Spending the time and small amount of money during proper screening will save you headaches and potentially a lot of money down the road.