How to Use Tenant Screening to Find High-Quality Tenants
As a landlord, screening tenants is an important step in the rental process to ensure that you are renting to responsible and trustworthy individuals.
Because of the non-tangible nature of background screening, it can become overwhelming when deciding where to start and how to interpret the results.
Some things, for example, can be looked over, while others are non-negotiable.
Below, we'll cover best practices for screening tenants, including how to run:
- Credit
- Rental history, and
- Background checks
We'll also talk about how to comply with Fair Housing Laws and how to maximize the investment on your rental property.
Part I: Getting Started with Tenant Screening
First, let's cover a few initial steps you should take before officially screening your applicants:
Prescreen Tenants Using a Rental Application
The first step in the tenant screening process is to have prospective tenants fill out a rental application.
This application should include information such as their name, contact information, current employer, and rental history.
Having a written application allows landlords to have a record of the information provided by the tenant, and it also gives tenants the opportunity to provide any additional information that may be relevant to their application.
Many property managers look at it as a first impression to the application and rental process.
Are landlords required to use written rental applications?
While it is not required by law for landlords to use written rental applications, it is highly recommended.
Having a written application not only allows landlords to have a record of the information provided by the tenant, but it also gives tenants the opportunity to provide any additional information that may be relevant to their application.
For example, you could request referrals in your rental application, which is yet another form of screening that will help improve the quality of tenant you accept.
Set minimum applicant requirements
Before accepting tenants, landlords should set minimum applicant requirements, such as a minimum credit score and income level.
This helps ensure that you only accept tenants that fit what you're looking for and minimize accepting tenants that will cause you problems down the line.
Landlords should also set guidelines for the number of occupants per unit and lay out guidelines for things such as pet policies.
Part II: Ways to Screen Tenants
The best way for landlords to screen tenants is to run a credit, rental history, and background check. This will give landlords a comprehensive view of the tenant's financial responsibility and past rental history.
Landlords should also speak with the tenant's current employer and previous landlords to get a sense of their rental and employment history.
A note on discrimination
Federal fair housing laws prohibit discrimination against prospective tenants on the basis of race, color, national origin, religion, sex, familial status, or disability.
Landlords should be aware of these laws and not make rental decisions based on any of these protected characteristics.
Credit, rental history, and background check
Running a rental, credit history, and background check is an important step in the tenant screening process.
This will give landlords a comprehensive view of the tenant's financial responsibility and past rental history.
Landlords should also make sure to comply with any state and federal laws related to credit and background checks.
Criminal history
When running a background check, landlords should take into account any criminal history of the tenant.
However, it's important for landlords to comply with fair housing laws and not discriminate against prospective tenants based on their criminal history, unless the crime is directly related to the tenancy.
Using screening reports
Screening reports are a great way to get all the information you need easily from one place.
Some services, like TransUnion's SmartMove, also offer additional services not typically included such as a resident score.
However, keep in mind that even these reports may not be 100% accurate and should be used as one tool to make an informed decision, not as a sole determining factor.
Employment history
Not every landlord checks for employment history.
With that said, it's an important part of finding out if that tenant has a reliable way of paying rent now and has shown that reliability consistently over a set period of time.
In addition to employment history, some landlords check income as well, which allows you to figure out just how much rent a tenant should be able to afford.
Customize your tenant screening questions
You can also choose to customize tenant screening questions to fit your specific rental properties and needs.
This can include asking about credit score, income level, and the number of occupants per unit.
Landlords should also make sure that the questions are compliant with state and federal laws.
Accept or reject applicants after screening?
After reviewing the credit, rental history, and background check reports, landlords should make a decision on whether to accept or reject the applicant.
This step is 100% up to your own discretion, so make sure that you're making the best choice for your investment.
Should You Use a Tenant Screening Service?
Tenant screening services are companies that assist landlords in running credit, rental history, and background checks on prospective tenants.
These services can provide landlords with a comprehensive view of the tenant's financial responsibility and past rental history.
You should research different tenant screening services to find one that is reputable and compliant with state and federal laws.
Some property management software, however, can help you streamline this entire process, keeping all your information under one roof in addition to tenant screening... like DoorLoop.
How to Screen Tenants: Final Checklist
We've gone over many steps in the tenant screening process, so here's a recap of the most important steps to take when setting up your screening process:
- Set minimum applicant requirements
- Comply with Fair Housing Laws
- Run a credit, rental history, and background check
- Speak with the tenant's current employer and landlord
- Use a tenant screening service or property management software
DoorLoop to the rescue
In conclusion, screening tenants is an important step in the rental process to ensure that you are renting to responsible and trustworthy individuals.
By following the tips and best practices outlined in this blog post, landlords can effectively screen tenants and make informed decisions about who to rent to.
It's also important to comply with state and federal laws related to tenant screening, credit, and background checks.
Additionally, comply with Fair Housing laws to ensure that you're not discriminating against any protected class of tenant. Finally, consider using property management software to streamline the tenant screening process.
DoorLoop can help you automate the entire rental process from providing you with a tenant screening system to automatic rent collection, helping you keep everything under one roof.
Good tenant selection minimizes how much time you have to spend responding to complaints, chasing down late rent, and dealing with tenant turnover.
DoorLoop is a one-stop shop for all your property management needs.
It makes your life easier by not only helping you collect rent on time but:
- Manage tenant complaints and requests
- Tackling your entire property accounting
- Keeping clean property management records, and
- Much more
Schedule a free demo to give DoorLoop a try today.
Whether you decide to go with DoorLoop or not, make sure to cross your 't's' and dot the 'i's' of your tenant screening process before moving on to the next step: completing new tenant leases.
