Are you a new landlord compiling a tenant background screening policy or a long-time landlord revising your tenant background checks? In either case, consider the four tips below as best practices for sensible tenant screening.
The most critical aspect of tenant background checks is that you don’t have free reign. There is considerable debate about the ethics of tenant screening, including whether landlords should be allowed to consider criminal history and other background information during the tenant application process. In jurisdictions like Seattle and Detroit, ordinances now restrict which background checks landlords can run on prospective tenants.
As a landlord, it’s necessary to remain familiar with all relevant legislation. Don’t forget the Fair Credit Reporting Act (FCRA), which outlines the protocols you must follow when conducting tenant background screening.
Once you know what you’re legally allowed to do with your tenant background checks, you can begin crafting a detailed, relevant, and fully compliant tenant screening policy. Regarding relevance, you should focus on criminal history, credit history, employment, identity and address history, and rental history. Background checks such as driving record checks and education history are irrelevant to housing situations, so you can skip them.
For many tenant background screenings, landlords emphasize the financial situations of would-be tenants. While employment, income, and credit history can speak to a tenant’s likelihood to make rent payments consistently and on time, landlords should avoid putting too much weight on the credit report.
Adverse credit can result from many factors. Especially after a year as unusual as 2020, during which many people lost their jobs and found themselves in difficult financial situations due to Covid-19, landlords should not penalize prospective tenants for past financial mistakes or unavoidable periods of economic struggle.
A better option might be speaking with past landlords and other references to understand a tenant’s character and reliability. These personality traits often contribute more to the behavior of a “good tenant” than spotless credit.
When couples apply for housing together, one member often communicates with the landlord. In these situations, remember that you are considering two tenants—not just one. Running a background screening on only one of the prospective tenants leads to the risk of overlooking a red flag in the other person’s background. Vetting the two tenants will give you the necessary information to make a wise leasing decision.
Please note: Effective September 2024, we discontinued tenant screening and related credit report services. Because this is not a core market for us, we cannot support its rapidly growing regulatory burdens.