How to do a Tenant Background Check like a Pro?

Steps to Follow during Tenant Background Check

There are certain steps you can follow to do a thorough tenant background check on prospective tenants. However, successful landlords always suggest hiring a rental management company or a tenant screening company to carry out such tasks. However if you are carrying out this on your own, here are the exact steps to do the tenant screening like a pro.

#1 Interview the tenants

The foremost step in the tenant background check starts with an quick interview of prospective tenant. Interviewing the prospect give you an insight into their lifestyle and whether the prospect qualifies your rental criteria or not. You can have this quick interview over a call or can use a Google form to make the process smoother.

Questions To Ask Tenants before Renting The Apartment

• Why you need this new accommodation?
• From when you want to move in?
• Do you require parking space if you rent here?
• How many people will be living with you?
• Do you smoke?
• Are you previously renting somewhere?
• How many pets will be staying with you?
• How long were you renting the previous place?
• Do you have a reference for the previous landlord?
• Does your previous landlord know you are moving here?
• Do you have any remaining dues with the previous landlord?
• What kind of job you do?
• Where are you employed currently?
• Are you fully aware of the rental application process?
• What is a rough estimate of your income?
• Will it be fine to run a Tenant background screening process on your application?
• Have you ever been evicted?
• Do you have any criminal records?
• Is there anything you want to tell before starting the Tenant background screening?
• Will you be able to pay the security deposit during the lease signing?

Interviewing prospects first hand will help you pick the right tenants and eliminating the bad tenants in the first place itself. 

#2 Check Tenant`s Public Records

On getting answers to the above questions, you get a brief understanding of the kind of this prospective tenant.  Ensure to always have this kind of pre-screening before having tenants visit at your property.

Now, if you feel the prospective tenant has made to your rental criteria, ask them fill the rental application.

Create Your Own Rental Application

A Rental Application is the most important element in the line of a tenant background check. It helps you collect the required information and to do a thorough inspection of the public records of the prospective tenant with their consent.

Inspection of public records will let you know of the tenant`s past and whether is the tenant right fit to stay at your property? You can then  peacefully let the tenant rent your property. These reports can be accessed by using the tenant`s social security number. There are various online companies that can generate the Tenant`s public records report for you.

Having tenants with questionable public records increase your risk and they can become a potential liability for the business. You should stay away from renting to such tenants and does a complete background check always. The things you should be concerned in public records include evictions, criminal records, tax liens, foreclosures, and bankruptcy in the recent past. 

• Eviction:

The tenant is evicted if he/she hasn`t paid the rent or has violated the terms of the lease agreement. Such tenants are prone to get evicted again and that can become a hassle to you. 

• Criminal Records:

The criminal record check gives details of all the possibly reportable crimes. You should stay away from tenants that were convicted of a crime. However, you must look deep into the records if the tenant was just arrested and not held convicted for the crime.

• Tax Liens:

If your tenant has pending tax payments, the IRS can liquidate renter`s assets or garner his wages to fulfill pending tax lien. In that case, your renter may not be able to pay the rent and can pose a problem for you.

• Previous Bankruptcy:

If the prospective tenant has a history of bankruptcy, you should reconsider them before having on property. If a tenant has charged for chapter 7, you must immediately reject his application. And, if they are charged under chapter 13, you can consider them but only after due diligence.

#3 Run Tenant`s Credit Check

The third step in the tenant background check is running a credit check on the prospective tenants. It is important to ensure that the tenant is financially stable that he will pay rent on time. Having the credit report of your tenant, you can assess their habits whether they make timely payments or delay it often. A landlord need a written consent from the prospective tenant to be able to  run a credit check.

A tenant with good credit is a boon for a landlord.  But if you find a tenant with negative credit history, you can reject them with a proper documented reason. However, it is always advised to talk to them about their bad credits and then you can act your due diligence. They may had a hard time but it is important they understand their financial responsibilities. Ensure these checkpoints when reviewing someone`s credit history.

• Credits Inquiry

You should look for hard inquiries while reviewing the credit inquiry report. It gives you a clear view of how many times the prospective tenant has applied for a loan. High credit inquiries mean your tenant often requires credits which can be a good reason for you to reject their application.

• Credit History

The credit history of the tenant gives you a clear picture of a tenant`s borrowing history. You can view whether they have any bounced installments, late payments, credit card defaults or worst,  bankruptcy.

• Credit Score

It is important to verify the prospective tenant`s credit score before renting him your property. A good credit score means that they have the right income to debt ratio. And you can expect timely rent payments without any default.

• Current Debt

The current debt report of the prospective tenant will help you understand the financial stability of the tenant. Whether they have maxed out their credit limit and are high on liabilities. Lots of liabilities mean a delay in rent payments or even worse.

If a Prospective Tenant has a minor blot in the credit history, you can consider a taking larger security deposit, however, within specified state limits. Or alternatively, require a Co-Signer to assume the financial responsibility. 

#4 Previous Landlord References

It is always a good idea to obtain prospective tenant`s previous landlord references. Landlords sometimes skip this step thinking they have already checked their credit and public records. The tenants might have stood tall on these two verticals but that doesn’t verify their credibility for society and fellow tenants. Verifying with the previous landlord will give you a glimpse of how they behaved earlier staying at their past accommodation.

You can always call the previous landlord and ask some questions about the prospective tenant residing term at their property. By asking the previous landlord, you can understand the part of your tenant`s personality. Mostly all the landlords ask just two questions that whether they have any pending dues or ever they delayed payments. However, you should dig a little dipper and include these important questions to previous landlords.

• Do you know that the tenant is moving to a new property?
• Does the tenant have any previous dues with you?
• How regular tenant was making rent payments?
• Did tenant ever default on any payment?
• Had the tenant caused any damage to the property?
• How was tenant behavior with the neighbors?
• Was tenant qualified to receive their security back while moving out?
• Had you evicted tenant?
• Had tenant caused any nuisance during the stay there?
• Will you rent your apartment to the tenant again future?

#5 Contact Tenant`s Employer

The fourth and the important step in the line of tenant background check is to validate prospective tenant`s income and employment records with their employer. The tenant must have a steady and stable income to pay rent on time. You can take details of the employer and the pay slips from the prospective tenant`s itself.  Getting them from tenants, you can verify them directly from the employer (HR) by giving a quick call.

You can call them and inquire if they need a signed rental application for the tenant`s verification. If so, you can easily mail them the rental application to verify the details of the tenant. Once they review the application, you can have a quick call over the phone. These questions will help you get the job done the right way.

• Is the tenant current employee in their company?
• What is the tenant`s hiring date?
• Is the tenant a part-time or a full-time employee?
• What is the Tenant`s job profile in the company?
• What is the tenant monthly or annual salary?
• Is the tenant on a contract basis or a permanent employee in the company?

Recommended Read: Why to set up a custom lease when putting a tenant on your property?