How to Conduct Better Tenant Screening

It’s hard to run a successful rental business if you don’t find great tenants for your units.

Tenants who don’t pay rent on time, damage your property, and violate other policies of your lease will end up costing you time and money. The only way to avoid these low-quality tenants is to screen every prospective tenant thoroughly.

Here are some ways you can conduct better tenant screening to sign leases with the kinds of tenants you want:

Make a Detailed Rental Application

When a renter is interested in your property, you should always require them to fill out a rental application. Think of a rental application as your first line of defense. It’s your chance to ask tenants questions about themselves directly to decide if they meet your standards before you spend time on a credit report and background check.

On a rental application, you should ask applicants to include proof of income, a list of prior and current residences, employment history, references, pet information, and contact information. Also, make sure you ask for permission to run a credit report and provide all the necessary legal disclosures on your application.

In today’s increasingly digital landscape, consider accepting your rental application online. This is easier for most renters, and it increases someone’s likelihood of applying.

Call References

Many landlords don’t act on the employer and landlord references a tenant provides when submitting their application. This is a mistake. Always call references to confirm the information that a tenant has provided.

Talking with other landlords is also a great way to understand someone’s renting characteristics. Landlords who’ve rented to this tenant before are uniquely positioned to tell you if this person paid rent on time and respected their policies and property.

Run a Background Check

A tenant background check consists of two components: a criminal records check and an eviction history check.

Criminal records are public information. It’s your right as a landlord to deny an applicant whose criminal record suggests that they pose a danger to you, your other tenants, and your neighbors. That said, some states have laws preventing you from rejecting an applicant who has committed less serious crimes, so review your state’s legislation regarding criminal record checks.

Eviction history records tell you about someone’s prior evictions with dates, addresses, and case numbers. An applicant with one or more evictions is never a good sign. The last thing you want is a tenant whose renting behavior forces you to spend time and money on an eviction.

Perform a Comprehensive Credit Check

A credit report lets you in on how financially responsible someone is. It may be tempting to judge an applicant’s credit simply based on their credit score, and while this is a good place to start, you should dig a bit deeper.

Pay particularly close attention to how often your applicant misses payments, whether that be rent payments, credit card payments, car loan payments, etc. You can’t trust someone who frequently makes late payments to reliably pay your rent on time. A missed payment every now and then is no cause for concern, but be wary of someone with upwards of ten missed payments.

Use a Tenant Scoring System

Throughout the tenant screening process, you must follow fair housing laws, which prevent discrimination in the housing market. To protect yourself against a discrimination lawsuit, even if you didn’t intend to discriminate, you should use a tenant scoring system.

A tenant scoring system is a way of grading each applicant with the same criteria to ensure that you’re being objective in your decision and picking the most qualified tenant. These criteria should be based on factors such as total income, credit history, eviction history, landlord references, etc. Most importantly, make sure you’re consistent with how you evaluate all your applicants and keep good records.

Conclusion

Effective tenant screening is necessary if you want to find tenants who will help your business instead of hurting it. By adhering to the tenant screening techniques discussed in this article, you’ll have greater success at signing leases with the kinds of tenants you want.