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What to Check When Screening Tenant Rental Applications

Remen Okoruwa
Remen Okoruwa Published : April 15, 2021

Thorough tenant screening is one of the most important aspects of processing rental applications. Screening rental applications is crucial if you want to avoid problematic tenants, late payers, or worse. Taking time to screen tenants properly reduces the risk of upsetting your other tenants while ensuring your income remains steady.

Of course, even the most successful landlords must fill a vacant property from time to time. This isn’t always a bad thing. You can take advantage of the vacancy to carry out any necessary upgrades and repairs. These rental unit improvements ensure that the unit is in top condition for the next tenant. But when properties are vacant for too long—landlords are on edge. 

One problem startup landlords face is that they skimp on tenant screening if a rental unit is vacant for too long. Nerves can take over, and the fear of never finding a tenant can lead to costly mistakes. The result can mean rushing through a tenant’s rental application and failing to conduct an adequate screening process. 

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What should you check during the tenant screening process? What are the red flags to watch out for on rental applications? 

This article is a complete guide to screening tenants when you are processing rental applications. 

The Law Regarding Rental Applications and Tenant Screening

The Fair Housing Act law says that you can’t refuse housing to someone based on their race, color, nationality, or religion. You also can’t refuse to rent to people whose sexual preferences or family status isn’t in line with your views or anyone with a disability. 

It is worth checking your state law regarding tenant screening. In some cities, you can’t refuse someone with a criminal record. Of course, nobody is suggesting you would actively not rent to a particular person. But to be a successful landlord, it’s crucial to be aware of unconscious bias and local laws. 

It’s also crucial to remember that for tenant screening checks, you’ll need their permission. Therefore, it’s a good idea that the rental application includes a part where the applicant approves credit checks, employment checks, and background checks.

What to Check When Screening Tenant Rental Applications

It’s vital to check their income, credit report, employment history, and landlord reference letters during the tenant screening process. Additionally, it’s a good idea—if your state laws allow—to carry out background checks. The screening process should help you get an overall picture of the prospective tenant.

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Here are five essential things to check during the tenant screening process.

1. A tenant’s credit score

Checking a tenant’s credit rating is standard on all rental applications. A person’s credit score shows you what debts a person might have and their ability to pay bills on time. 

How can you rate a tenant based on their credit score? Here is information provided by Equifax:

  • A credit score below 580 is considered bad
  • 580 - 669 is fair
  • 670 - 739 is good
  • 740 - 799 is very good 
  • 800 and above is excellent

Generally speaking, you want your tenants to have a credit score of at least 600. However, between 650 and 670 is ideal. 

It’s good to remember that younger applicants may not have had time to build up a credit history or even have a credit score. Someone who has applied for credit with various lenders will have a lower credit rating. But that doesn’t mean to say they don’t pay on time. Others appreciate their low credit score and are willing to go the extra mile in other areas to afford rent. 

2. Tenant screening and background checks

First, you should check with your state housing laws if you can legally base a decision on criminal history. A background check will provide you with the necessary information about any illegal activities in the tenant’s past. If your state does permit criminal background checks, this is an absolute must. If a tenant commits a crime on your property, you can be held liable. 

3. Landlords references and evictions

Getting reference letters from previous landlords should always be part of the rental application process. After getting the letter, be sure to follow up with a phone call. And, be careful of any tenant who has a previous eviction. 

Of course, there might be numerous reasons why the tenant was evicted. Even if they’re open about it, you shouldn’t rely on just what your tenant tells you. Check eviction court records and, if necessary, ask for more information from the potential tenant. 

If a tenant has an eviction history, they are unlikely to list that landlord as a reference. Even if a tenant has listed references, you still need to confirm that the landlord is real. After all, you don’t want to be speaking to their best friend or mom.  You can check with references for on-time rental payments and the condition of the property when they left. 

4. Proof of income

It is sensible to check the last three payslips or the tax returns of a tenant to ensure they have enough income to pay the rent and the bills. Another good rule to stick to is to see if they earn approximately three times the rent amount. If a tenant is unemployed, they may still have the financial means to afford the rent. In this case, you can ask for proof of savings or other income they might receive. 

5. Employment history

Ensure that the tenant works for who they say and that the paychecks match the employer’s records. Many employers won’t give out details. It will be up to you to verify the information you have with them. It would be best if you asked for an income verification letter. 

Employment history can also point to stability. If someone tends to switch jobs every six months, you might not be looking at a long-term tenant. Someone with consistent employment is more likely to pay the rent than someone who is regularly switching jobs.

General Questions When Screening Tenants

When chatting with your prospective tenant, it’s essential to avoid potential discriminatory questions. You can’t ask any questions based on the following criteria:

  • Familial status
  • Race
  • National origin
  • Religion
  • Sexual orientation
  • Disabilities

Of course, you can ask why a person left their previous rental property. If they tell you it’s because they want to start a family, that’s fine. But asking anything more might be considered discriminatory as it refers to familial status. 

You can also ask about pets and whether they smoke, as these restrictions could be part of the rental agreement. 

Pay close attention to how they answer your questions. Are they positive and open, or does it feel like they can’t get rid of you quickly enough? This isn’t a reason to rule them out, but it might provide insight into your future interactions with them.

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Red Flags to Watch out for when Screening Tenant Applications

Here are just a few things that should raise a red flag and make you consider whether this is the right tenant for you:

  • Unverifiable income: Watch out for people who have lied about their income. For a start, lying on a rental application is highly unethical. But worse, they may not be able to afford the rent payment. It would help if you were wary of those who don’t declare their income because it might be coming from illegal activities.
  • No previous landlord references: If this is a person’s first time renting, it’s understandable they can’t provide references. If they are reluctant to give a reference, then it suggests there have been issues.
  • Multiple addresses in a short time: Moving frequently could be because of work, and you can easily verify this information. It may also indicate problems with rent payments, other tenants, or previous evictions.
  • Application and screening reports don’t match: Of course, anyone can make an honest mistake. But listen to your instincts. It could be that the person was lying and hoping you wouldn’t check.
  • The applicant provides the credit report: Always arrange the credit history report yourself. Anyone with basic IT knowledge can alter credit reports. Make sure you collect credit reports from one of the three major credit reporting bureaus. You can also pass on screening costs to rental applicants.
  • Numerous co-applicants: It makes sense for a group of students to pool their resources. But each renter should fill out a separate rental application form. This way, you can screen every tenant and know if they are reliable and can pay rent.
  • Applicants have broken previous lease agreements: You need to hear both sides of the story so confirm the issues with the previous landlord. This could be a warning that the applicant will do the same to you.

Tenant Screening — What to Check in Rental Applications

Tenant screening is essential to find the best tenants for your rental properties. Making an effort now can save time, money, work, and a ton of stress in the future. One way to speed up the process for both parties is to carry out pre-screening over the phone. By eliminating those who don’t qualify, you won’t find yourself showing your property to those who are potential timewasters. 

Topics: landlord tenant law, landlord reference letter, rental application, tenant screening, screening tenants