“How to Do Tenant Back Ground Check and Screening” written by Mike Marko
When leasing out or renting out property, you should also know how to judge which people are safe to lease or rent out to.
That’s because some potential tenants aren’t advisable in the sense that they introduce unwanted risks for landlords.
They may have a history of being embroiled in illicit activities, for instance. Or they may have unsteady finances, which can affect your rent collection.
You have to make sure that you will be able to lend the property to trustworthy people. This is exactly why you need to conduct a proper back ground check.
Conducting a proper back ground check is not an easy task. There are things that you should and should not do when trying to manage it.
Today, I’ll help you with that. I’ll show you how you can do a proper tenant back ground check and screening for your property rental/leasing business.
How to Conduct Back Ground Checks and Tenant Screening
As I said earlier, screening potential tenants is very important for property owners who want to lease their properties. That being said, it’s not something you can do arbitrarily.
That is, the first thing to know about doing back ground checks on tenants is that you require their permission to do it. Never run a back ground check on a tenant without letting him or her know beforehand.
That’s because most states have laws related to this process. For instance, part of your standard back ground check is getting a copy of someone’s credit report.
However, you’re not allowed to get a copy of someone’s credit report without a legal need/permission to do it.
Things like this are important when you’re about to do a back ground check. You want to make sure the entire process is aboveboard, as it’s something you’re doing for your business.
As I said before, I’ll help you out with that in this article. You’ll learn how to properly conduct a tenant back ground check on your own to save money and effort.
You can actually get a back ground checking company to do it for you, but costs money. That’s why some landlords prefer to do their own back ground checks, especially if they’re on a budget.
At any rate, let’s take a look at the steps to follow when doing a back ground check. Let’s begin with the first step — narrowing down the list of applicants you want to do checks on.
Listing Prospective Tenants
Before you can start screening, you will have to make a final list of your prospective tenants.
This list should be composed of only those people who are shortlisted for the property. This can help you keep the cost and effort of back ground checking down.
Make sure too that they know you are going to conduct the back ground check. As mentioned earlier, this is important for legal reasons.
You can generally inform them of this via the application form for potential tenants. This refers to the form you provided applicants interested in the vacancy.
Ensure the application form you make potential tenants fill out tells you everything you need to know to run a back ground check. That includes identifying information like their names and prior addresses.
Make sure too that it discusses your intention to run a formal back ground check, criminal history report, and credit check. Note in it that you need their consent to check certain parts of their history.
Furthermore, be sure to add a provision that notes how they may give consent for that. For instance, it can be as simple as indicating consent by signing the application.
Because the application form is so important to the back ground check process, it pays to get it right. That’s why we’ll go over some of the elements you should have in your form for a thorough back ground check.
You need to know if applicants are employed, how many jobs they have, and how long have they been in those jobs.
If you know those things, you will have an idea of the tenant’s financial standing.
After all, when you conduct a thorough back ground check, one of your chief goals is to know if they will be able to pay you rent. If they have a good and stable job, that’s a good sign!
If the tenant likes to hop from one job to another, on the other hand, you will have to reconsider. This is because they might not be able to be consistent in their payments.
Next, you will have to know about their current income level. You have to include this in your back ground check application form because this is the quickest way for you to know if they are capable of paying the rent.
You need to check if their income covers their rent and their daily living expenses. Look for tenants whose monthly income is about thrice the rent you are charging.
Contact Information or References
You should also request the contact information of their previous landlords for reference. We’ll talk more about this later, but for now, let’s just say it’s an important reference.
If they have no previous landlords and this is their first time renting, then you can ask for other persons of reference instead.
The reason you need to include this in the application form for your tenant back ground check is that you need to know them better. This is for you to get a better idea of their character and trustworthiness.
Next, you may want to check some of their lifestyle information. By this I mean you may want to know how many pets they have, or if they engage in activities that might harm you, etc.
The goal here is really just to find out if they’re a good fit for your property or neighborhood. That being said, you should know that there are certain things you can’t ask in this part of the form.
One way of knowing which questions wouldn’t suit this part of the back ground check is to refer to the Fair Housing Laws.
This is so that you can make sure that you won’t be asking for information that might be discriminating or offensive.
Failing to observe these laws can get you in a lot of legal hot water. So, be sure to check these before you put any lifestyle questions in your application form as part of your back ground check.
Running a Credit Check
Let’s say you have your shortlist of applicants and their filled-out application forms ready.
The next step for the back ground check is to run a credit report.
Now, this is something that will cost money, whether you do it yourself or have a back ground checking company do it for you. The credit bureaus charge for copies of credit reports.
Fortunately, there are states that allow property owners to charge their tenants for the cost of a back ground check or credit check. On the other hand, there are also some states that don’t.
Whether you or the tenant pay for it, it’s important to get it for each applicant. It can tell you a lot about what they might be like as tenants, from a financial perspective.
The trick is to check their Credit History and Current Debts. This is for you to have a clear picture of their capacity to pay rent and for you to be wary of any potential trouble that they might cause.
The person or the potential tenant might have unpaid debts that he or she might get imprisoned for, for instance. If you see that in a credit report, choose a different applicant!
Running Other Background Checks
Now for the other parts of the back ground check, which will give you a detailed report of a person’s past. This is when you refer to official records or sources other than the person for information about them.
Before anything else, note that it’s possible to get a third party to do this for you, as I said earlier. It just means you’ll have to pay money for each back ground check.
But since I assume you’re here to learn how to do them yourself and keep costs down that way, let’s talk about the checks you can run yourself.
Note that most of these are accessible if you have the following:
- The applicant’s full name.
- The applicant’s social security number.
- The applicant’s permission to request the documents or reports necessary for these checks.
Assuming you have all those, let’s talk about the things you can look into with a back ground check.
You may want to start this part of the back ground check by seeing the applicant’s public records. There, you will find out if the tenant has gone through a legal battle or has ever been sued.
Again, this is really just to give you an idea of what sort of risk you’re taking on with a particular tenant.
For instance, you want to avoid those who have been sued for unpaid rent or other serious financial issues.
After all, such a history increases the odds of them getting into similar straits again. They might be financially risky tenants to take on.
Another thing that you need to be wary of when checking out the back ground check report is the applicant’s criminal record.
Once a potential tenant has a lengthy or a patterned criminal record, then you might want to rethink letting them into your property. You wouldn’t want to get mixed up in that kind of thing!
Last but not least, we have evictions. You can usually see these in a person’s public records, at least if the evictions were formal ones.
The need to look at these should be self-explanatory. Naturally, when looking for a tenant and doing a back ground check, you will want to find out if they have ever been evicted and why.
You need to check why they got evicted because the same issue might occur once you have accepted them.
Contacting Previous Landlords
I mentioned this before as something you should do when seeking references for applicants. It’s also useful when investigating their previous conduct as renters.
One of the things you’d want to know when doing this is if they have no more outstanding rent payments with their previous landlord. If they do, that’s a red flag.
Also, you need to make sure that they have a clean slate with their previous property owner before you can accommodate them.
This way, you won’t have to deal with problems that they have with their previous landlords.
Interviewing Potential Tenants
Now, after all the things above have been done, you may finally have a serious talk with your applicants to flesh out your image of them further. You can ask them questions if you have any left.
Most landlords just use this opportunity to get a sense of the applicant’s character or personality. That’s why most of them just chat casually with tenants during this phase.
Don’t be afraid to take notes at this point, though, if you notice anything that may help you make a decision later on. It can be helpful when you’re sifting through a good number of applicants.
Final Thoughts on the Back Ground Check
Now that we have all that sorted out, all you have to do is to follow everything written above when doing your very own tenant screening and back ground check.
Again, there are several things that you have to consider, to think of, and to be meticulous about when doing your very own applicant back ground check or screening.
First, you need to start with a shortlist of your tenants. Then, you need to go over the information they provided in their application forms, to see if any red flags exist.
After that, using their identifying information, you can check their credit reports, public records, and the like. You can also move on to asking their previous property owners or persons of reference about their conduct.
Next, you have to officially interview them if you have any questions you’d prefer to ask them in person. You may also do this to evaluate their personality or character for yourself.
Once you have done all that, you’ve achieved your back ground check! It should give you the information you need to pick the right tenant from all your applicants.
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