Applications

What Is Tenant Screening and Why Do You Need It?

By Ann July 03, 2023

What do landlords fear the most? Common fears typically include unexpected maintenance issues, destructive tenants, or properties that stay vacant for too long. To prevent such unforeseen surprises, it is important to run screening reports before signing lease agreements.

Performing background and credit checks can help you select the right tenants who will be able to pay their rent and be on time, as well as to protect your real estate property and follow lease terms during their tenancy.

Who should pay the tenant screening and application fees?

In some states you can ask your potential renters to pay an application fee to cover the expenses associated with background and credit checks or alternatively, you can cover the costs yourself. There may be certain restrictions on how much you can charge for an application, so make sure you follow your state and local regulations. According to RentPrep, the average rental application fee is $30 per applicant.

What are the potential costs of not charging an application fee?

Loss of a month or more in rent
Lower rent over the next 12 months.
Dealing with a bad renter.

Here you can get more information about application fees.

By requiring an application fee, you can also ensure that an applicant is serious about renting your property.

Who is a “dream” tenant?

A perfect tenant is a person with no eviction history who will treat your property as if it is his/her own, will follow lease terms, keep the rental clean, and of course, pay their rent on time. With the help of a tenant background check, you will be able to select a qualified long-term tenant who will meet your requirements. Background checks are important for safety reasons as well.

Tenant credit check

Creditworthiness is determined by a wide range of factors. A history of late payments, overcharging accounts, or any other financial mistakes, especially ones as serious as bankruptcy, are red flags to look out for in a potential tenant’s credit history. Keep in mind that a non-paying renter may be disastrous for your rental business's profitability.

The tenant credit check report provides information about the applicant's credit history.

For example, a tenant credit check on TenantCloud includes SSN Verification/Address History, Bankruptcies Search, Full Credit Report with Resident Score.

Tenant background check

Though each landlord has their own set of requirements, a tenant background check generally includes a criminal background check, a credit check, and job verification. Here are a few things to pay attention to:

Criminal background - when reviewing an applicant's criminal history, it's common to evaluate the kind of offense, the severity of the offense, and the length of time since the crime was committed.
Sex offender registry check - the registry is a list of all sex offenders who have been convicted in a certain state. The address, physical appearance, and criminal history of a sex offender are often included in registers.
Reference from a previous landlord - not necessary, but welcomed.
Eviction history - do not forget to verify that your potential tenant has a clear eviction history.
Instant State Data
OFAC/Most Wanted Searches

Tip! If you are overwhelmed with all the information you need to collect, let real estate software help you.

Make Informed Rental Decisions with TenantCloud

TenantCloud offers a variety of tenant screening reports to assist you in making informed rental decisions:

Full Check Report ($39):

Provides a comprehensive credit history from various sources, including banks, credit card companies, collection agencies, and government authorities.
Conducts background verification to confirm the applicant's identity and validate the accuracy of their criminal record, education/job history, and other important details about their past.
Includes a National Eviction Records search.

Full Check Plus ($45):

This option includes the standard Full Check Report and introduces the Income Insights report.
The Income Insights report compares the income details provided by rental applicants with the income information reported during the screening process.
It assists landlords in evaluating the accuracy of applicant income information for more informed tenant selection.

Credit Check Report ($30):

Provides all the information about the applicant's credit history that a creditor would receive, presented in an easily understandable format.

Background Check Report ($25):

Verifies the identity of the individual as claimed.
Enables examination and validation of the accuracy of their criminal record, education/job history, and other significant information about their past.

Choose the appropriate tenant screening report from TenantCloud to ensure you choose the right tenant.

Final words

With the help of a tenant screening report, you should be able to determine whether a tenant is a good candidate for your vacant rental property. Feel free to use all of the options at your disposal to learn about potential renters. The more you know - the safer it is for your rental business and property.