Rental fraud has gone up by as much as 30% as the application process becomes increasingly digital.
If you allow your tenant screening process to be impacted by fraud, you could face a heightened risk of financial losses.
That’s why it’s more important than ever to know how to screen a tenant properly.
If you’re not sure exactly what your tenant screening process should look like, don’t worry. We’ve got you covered.
Keep reading to learn how to screen and find high-quality tenants that don't put you or your client's investment property at risk.
How to Screen Tenants: A Step-by-Step Guide
1. Set your requirements
Before you can figure out whether an applicant meets your rental requirements, you’ll first need to get clear about what those requirements are.
Most landlord's tenant screening process includes checks for the following items:
- Landlord and employment history references
- Credit history
- Criminal history
You can set your own screening requirements for each of these criteria based on your concerns.
For example, payment problems rank among the top concern for 84% of independent landlords according to one study, so you may want to set a high-income requirement. (Just make sure you know how to spot fake pay stubs.)
Or, maybe throughout the course of your business, you’ve found that renters with higher credit scores make the best tenants. In that case, you could prioritize credit scores above 650.
Rental references are also important. They can help you fill in the details about the type of tenant an applicant would be.
The bottom line is that only you can decide where to set the thresholds for your applicants. But you need to make that decision before moving forward with the tenant-screening process.
2. Conduct pre-screening with your rental ads
Once you know your rental criteria, it’s important to make those clear on your ads and applications. This will help you pre-screen applicants.
When prospective tenants read through your ad, you want them to see what thresholds they will need to pass in order to qualify for the apartment.
That way, they can choose to bow out of the process themselves before ever applying.
This has the potential to save a lot of time on your end, as you’ll have fewer applications to process from candidates who never really had a chance of getting approved.
It’s also important to ensure that you’ve asked for all of the information you need to conduct a thorough screening of your prospective tenants.
Here are some of the main pieces of information to ask for:
- Basic contact information (name, current address, phone number, date of birth)
- Social Security number
- Driver’s license number
- Current employer and monthly income
- Current address and reason for leaving
- Pet information
- Smoking information
- Criminal background
3. Run credit and background checks
At this point, you’re ready to run background and credit checks. The easiest way to do that is with tenant-screening software.
Tenant-screening software returns all of the information you need in a matter of minutes. You’ll get a comprehensive report covering an applicant’s financial, rental, and criminal history much faster than you would if doing this manually.
Plus, services like Doorloop use SmartMove to conduct their checks.
SmartMove can predict evictions up to 15% more effectively than standard credit reports. That means you’ll get better results in less time for a prospective tenant.
4. Verify employment and rental references
If an applicant passes your threshold for credit and background, you can start reaching out to their employer and previous landlords for confirmation.
It’s important to take this step after you’ve completed the automatic checks conducted during the previous step.
Compiled reports from screening companies aren’t always able to give you information that could be critical to your decision-making process for a tenant.
For example, after contacting an employer, you might find that they just fired the applicant. Or, a landlord may tell you that the prospective tenant was a nightmare who left the property a mess when they left.
You never know what you’ll find, and it’s always better to be safe than sorry when it comes to screening people to live in your rental properties.
5. Speak with the prospective tenants personally
Finally, as the last step before making your decision, it’s a good idea to connect with your applicants directly – either in person or with a phone call.
This will help you just make the last confirmation that the tenant is who they say they are and appear to be at least fairly normal.
You don’t want to inadvertently sign a contract with someone who you wouldn’t have rented to if you met them in person. This meeting is to ensure that doesn’t happen.
Also, the meeting may give you some additional context for parts of an application that you weren’t sure about.
For example, a prospective tenant may have one poor mark on their application that they have a perfectly logical explanation for.
This meeting would be your opportunity to learn that explanation and decide for yourself if they're a good fit for you after all.
6. Make a final decision
Now all that’s left to do is make a final decision about the applicant. If they’ve made it this far, then there’s a good chance that they’ll make a fine tenant for your rental property.
3 Tenant Screening Software Tools
It’s much easier to screen new tenants when you use software to automate the process and simplify the results. Here are three options to look into.
Doorloop is an all-in-one property management solution with a complete suite of tenant screening services. It comes with:
- Background checks powered by TransUnion
- Comprehensive credit report analyses, including a bankruptcy report
- Eviction history
- eLeasing features
- And more
The bottom line is that Doorloop gives you everything you need to make screening tenants fast and easy. You’ll get a more reliable approval process that’s also more efficient.
Plus, Doorloop offers comprehensive tenant management software as well. You can use it both to screen your applicants and manage their payments, maintenance requests, and communications after they’ve moved in.
This all adds up to make it much easier to manage your rental business.
RentPrep is another tenant-screening software worth taking a look at. It offers bulk discounts when you purchase at least 50 screenings at a time.
The main thing to keep in mind with RentPrep is that you won’t get to see an applicant’s actual credit score on the reports you get. There also isn’t a way to charge applicants for the background check directly, which means you’ll have to recoup the costs another way.
All in, RentPrep can be a good option if you just need to screen a lot of tenants and aren’t looking for super detailed reports. But another option may make more sense if you’re looking for more than that.
Avail is a full-service rental property management software that also offers tenant screening. It’s a comprehensive tool that can make it easier to run your rental units.
The platform offers online rent payments, leasing tools, and maintenance management features. It also has an integrated feature for landlord reference checks, so it can make this aspect of the screening process easier on your as well.
Tenant Screening Frequently Asked Questions
How much does it cost to screen a tenant?
It typically costs between $25 and $75 to screen a tenant. Many landlords charge an application fee to cover this cost. Your exact charges can vary based on the state you’re in and the requirements there.
What’s a good credit score for a tenant?
Any credit score above 650 is typically considered good enough for the purposes of renting an apartment. But you can choose to be more or less restrictive than that.
That being said, landlords often look at a potential tenant’s application in its entirety when making a decision. If an applicant has a lower credit score, they may be able to make up for it with a higher monthly income or better rental history.
What background check tool do most landlords use for their tenant screening process?
Most landlords use background checks from TransUnion. Some still use Equifax and the other major credit bureau, Experian.
What questions can you not ask a prospective tenant?
Landlords must not violate the Fair Housing Act when interviewing applicants. This act guarantees equal access to housing for people regardless of gender, race, religion, familial status, and national origin.
In other words, fair housing laws state that you can’t ask a question related to gender, race, religion, familial status, or national origin. If you do and you end up declining the applicant, you could be sued for violating this act.
Try Doorloop's tenant screening tools today
Doorloop’s tenant screening tools come with everything you need to start screening your rental applicants more effectively, including:
- Comprehensive background checks
- Eviction reports
- Credit history reports
- And more
You also get the ability to:
- List automatically to keep your occupancy rate up
- eLeasing tools to streamline the entire leasing process from beginning to end, and
- A convenient rent portal and automated rent collection tools to start collecting rent immediately and ultra-conveniently
But don’t take our word for it. You can try a free demo of Doorloop today to experience it firsthand.
So, why wait? Sign up today to get started.