A tenant screening report or tenant background check contains need-to-know information about a potential renter’s financial, rental, and criminal histories.
This report is an essential tool in evaluating whether or not a rental applicant is a good candidate. One should always be considered during the rental application process.
What is a Tenant Screening Report?
A tenant screening report compiles various background check information on prospective renters.
The information collected is designated by the property management company. It can include:
- Identity verification
- Employment verification
- Credit reports
- Eviction records, rental lawsuits, and rental debt
- Rental history, including late or missed payments along with antisocial or destructive behavior
- Criminal history
- Sex offender registry checks
- National terrorist watchlist
These background checks are done after prospective renters have applied for a rental and have consented to having them done. It’s common to ask for permission right in the application form.
Federal law requires property managers to ask for permission before conducting background checks or pulling credit reports. The law also requires property managers to inform renters if they were denied housing due to information found in a background check and let them know why. Potential renters have the right to see their reports and dispute any information.
These laws are by and large protections found under Fair Housing guidelines.
The Federal regulations around renter screening reports do create more management work. However, it’s well worth getting this done.
Why is tenant screening important?
Property management comes with a significant amount of risk. Residents can miss rent, damage the property, become difficult to manage, get into conflicts with other residents, and more.There are many ways to attract great renters for your property. However, a tenant screening report is important because it provides key background information that can help you avoid high-risk renters.
Fraudulent Applications
Screening applicants allows you to verify the information they provided. Fraud is rampant throughout the rental industry. Applicants can lie about anything that may impact their chances of securing a new unit.
Unfortunately, it isn’t unheard of for renters to create fake references or fib their employment status. Renters who’ve run into trouble with previous management companies aren’t likely to be forthright about what went on. In other cases, renters might apply using fake names or stolen identities.
Rental History
Along with detecting possible application fraud, renter screening reports are necessary for getting a clear overview of how applicants have behaved at prior rentals.
A tenant background check delves into a rental history and can uncover details that would-be renters may prefer to keep to themselves, such as repeated noise complaints, hostile interactions with management, or outstanding fees.
These reports are highly informative. It’s important to get one done even if a rental candidate has provided management references.
Criminal Background Screening
A tenant screening report will tell you if a rental applicant has a criminal background. Furthermore, these reports can check sex offender registries and even terrorist watchlists.
It’s best to find out if candidates are irresponsible, reckless, or dangerous before entering into a rental agreement.
However, be aware that certain cities and counties have made it illegal to screen a renter based on their criminal background or history of incarceration. Alameda County in the San Francisco Bay Area is one of those. So, check your local laws before having this done.
Which parts of a tenant screening report are the most important?
The most critical information in a renter screening report regards a candidate’s ability to pay rent, history of meeting financial obligations, and any nuisance or criminal behavior. Make sure to carefully examine their employment status, rental history, credit report, and criminal background check.
Underemployed or unemployed people could misrepresent or falsify their work information. A tenant screening report will confirm if what they tell you is correct.
The rental history information covers potential renters’ track record of making timely rent payments along with any instances of outstanding debt, legal action, evictions, property damage, behavioral issues, and other relevant details. Property managers from prior rentals may offer rental scores and recommendations.
The rental history portion may be the most important part of the renter screening report. Examine it closely, particularly any comments or recommendations from former management companies.
Credit reports give a further look at a candidate’s overall financial profile, standing, and behavioral patterns. Look for issues like repeated late payments, outstanding accounts or collections activity, an exorbitant amount of debt, and other red flags.
Making sure to take a look at the criminal background checks is important as well. This can tell you about the character of potential renters.
How much does a tenant screening report cost?
Tenant screening reports are available from consumer reporting agencies or specialty services, like Qira.
The background checks retrieved from reporting agencies can cost anywhere from $15 to $75 per report. Credit reports, eviction history reports, and criminal background checks are considered separate reports which are charged individually. So, it can cost $65 to $75 and up to get a comprehensive tenant screening done.
A $75 report is affordable when evaluating one or two renters, but those costs add up quickly if you’re managing a multi-family property and have a stack of rental applications to get through.
Fortunately for our property managers, Qira offers tenant screening reports as a complimentary service.
Qira Offers Complimentary Tenant Screening
Qira streamlines the fiscal side of property management and helps property managers avoid common renter-related financial problems. As part of that, we offer tenant screening reports as a free add-on service to our partners.
Book a demo with us to discover more about this service!
