How to Do a Background Check on a Tenant or Renter

There’s an old proverb that says, “Trust, but verify.” If you’re a landlord, that phrase should be your modus operandi when it comes to prospective tenants. After all, it’s a simple matter for someone to stroll into your office and look and act like the model tenant, but there’s another old proverb you should keep in mind: “You can’t judge a book by its cover.”

As a landlord, you have to be diligent about vetting people who wish to rent from you. Your success as a business person depends on it.

DIY, or hire a professional?

If you own a large rental complex with lots of tenants and plenty of upkeep, you may be better off hiring a property management company to do the vetting for you. Of course, you could save the money and screen tenants yourself, which probably makes sense if yours is a small- to medium-sized rental property. It can be a time consuming process, but it’s necessary to protect your investment. Checking on tenants is a fairly straightforward matter: You want to be sure they’re reliable, have the necessary income to pay rent, and don’t have a troubled rental history.

Step one

Typically, the first step in checking a tenant’s desirability is to have them fill out a rental application. Some landlords draw up their own application template based on how they prioritize the necessary information. You can get a sample application from your local real estate association or from various online resources.

Most tenants are probably familiar with this part of the rental process, but you should be certain applicants understand that you’ll require a criminal report, credit and background check, and that by filling out an application, they’re giving you the right to check into their personal and financial background. Some of the most important points to check on include:

  • Income – Is the tenant capable of covering the rent along with utilities and other basic expenses?
  • Credit background – Payment and credit history should give you a good idea of their ability to stay current with their rent.
  • Employment – Check the applicant’s employment status, the length of their employment at their current place of work, and the number of jobs they’ve had in recent years.
  • Rental history – Check with previous landlords concerning a tenant’s rental background, including payment history, behavioral issues, damage, etc.
  • Additional information – Ask about other details that will impact their living situation, including how many pets they have, and ask for personal references.

Creditworthiness

This may be the most important information you’ll gather on a prospective tenant. Credit and payment history can be a red flag indicating an individual will have difficulty staying current, or it could certify them as desirable occupants who are diligent and conscientious about meeting financial obligations. Ordering a credit report through a service like Equifax will give you a good idea of an individual’s credit background going back as many as 10 years. One good way to assess an individual’s financial position is whether multiple unpaid balances and high-balance credit cards will make it difficult for them to cover their monthly rent payments.  

Rental history

Previous landlords will be valuable sources of information, because they can give you both a financial and anecdotal report on a potential occupant. For example:

  • Did they leave owing back rent?
  • Were they noisy, disruptive or destructive tenants?
  • Did they recover their security deposit upon moving out, or did the landlord keep it to cover repairs?

This is a sampling of the kind of information you’ll need in order to make a fair and informed decision.

Criminal check

Renting to an individual with a history of criminal activity and incarceration could place other tenants at risk, so be thorough with your criminal background check. Use common sense, and be discerning in determining whether a moment of poor judgment during one’s youth is on the same level as a felony and time served in jail. A background check can also alert you to whether someone is involved in a legal confrontation (for example, they’re in the process of being sued) or owes child support payments.

Talk with your tenant

Even an individual with a spotty history deserves a chance to shed light on their past. Sometimes, extenuating circumstances can explain a person’s actions better than a background report. Don’t eliminate the human factor from the process. Sit down with a prospective tenant for about an hour so you can get an instinctive feel for them, and listen to that instinct — it can help you avoid a lot of unnecessary headaches.