The Importance of Tenant Screening

By December 2, 2015Tenant Check

Effective tenant background checks are one of the best tools a landlord has to protect their investment. Tenant background checks allow landlords to screen potential tenants to assess the risk that the applicant will damage the property, fail to pay rent, create a nuisance or do something else that would be harmful to the landlord’s interest.

WHAT DOES TENANT SCREENING LOOK FOR?

tenant-screening-3One of the most common problems that landlords have with tenants is that they don’t pay rent. In order to make sure that this won’t happen, two of the major things that background checks check for are credit and employment history. If your tenant has good credit and a steady job, they’re more likely to stay up to date on their rent. Another thing that a renter background check should check for is the tenant’s living history. A comprehensive tenant background check will follow up with the tenant’s previous landlord to figure out why they moved from the last place that they lived. Did they leave on good terms? Did they pay the rent on time? Were they clean? Did they maintain the property? Information from prior landlords can be an invaluable resource for a tenant background check service.

TENANT BACKGROUND SCREENING AND THE LAW

tenant-screening-4Tenant background screening services are specialized consumer reporting agencies as defined by the Fair Credit Reporting Act, as a result they must comply with certain regulations. In addition, landlords can get themselves into legal trouble for housing discrimination if they aren’t careful with how they conduct their tenant screening. While overtly denying a tenant based on race, religion or national origin is obviously illegal, there are less well known types or housing discrimination that can land landlords in hot water. For example discrimination based on age or familial status is illegal except in the case of senior living centers. Even some types of discrimination based on criminal history may be against the law.

WHAT KIND OF TENANT BACKGROUND CHECK SERVICE SHOULD YOU USE?

While there are a number of online services that offer tenant screening, these services generally only use electronic databases to perform their background checks, meaning that they’ll usually only be checking easily accessible data like credit scores and criminal records. This leaves out all avenues of investigation that require speaking to references, old landlords and acquaintances. In addition, online tenant background checks often only check a fewtenant-screening-2 databases for every client, if they turn up nothing, they’ll report to you that the prospective tenant cleared their background check. A trained investigator will know where else to look when a perfunctory search doesn’t turn up anything, and will be able to mine a much deeper well of data to uncover the hidden past.

Hiring an investigator to perform a tenant background check isn’t for everyone. It’s a more comprehensive, but more expensive option than online checks. So it’s best to think carefully about the risks you’re taking and the relative value of your investment. Hiring an investigator may be the best option for long term leases, commercial, and high end residential properties who want the most comprehensive background checks for tenants available.