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How To Run a Background Check for Renters: 9-Step Guide

If you want to manage rental properties successfully and ensure your renters' safety, reliability, and financial stability, you need a solid process for running background checks for renters.

Imagine this scenario: You’ve just gathered all the paperwork from your applicant. The forms are paper forms, filled out by hand. You then must take the time to decipher their handwriting, manually entering the data into a tenant screening service. Then, you nervously check the status every few hours for the next three to five business days before the results come in. 

Sound like a headache? Don’t worry, there’s a better way! 

This post will walk you through the steps and tools you need to run a background check for renters for your properties. 

Why You Need a Background Check for Renters 

Renting out properties can be profitable, but it's not without risks. One of the smartest moves you can make as a landlord is to run background checks on your potential tenants. Let's dive into why this should be a non-negotiable step in your rental process.

First and foremost, background checks help you verify the tenant’s ability to pay rent. A background check provides insights into your tenant's financial stability. It can show you their employment history and credit score, helping you gauge their ability to meet their financial obligations.

Related Read: Tenant Screening Report Sample: How To Read a Tenant Report

Community safety should always be a top priority. Background checks can uncover any criminal history your potential tenant might have. While past mistakes don't necessarily condemn someone to a life of trouble, knowing their history can help you decide whether they fit your property and community well.

Another crucial aspect is checking for prior evictions or lease violations. Tenants with a history of eviction or lease breaches might be more likely to cause issues in the future. A background check can bring these red flags to your attention, giving you the opportunity to dig deeper into the circumstances.

Another reason you must run background checks for your renters is some insurance policies require landlords to screen tenants to maintain coverage. Skipping this step could put your insurance at risk, and that's a financial gamble you don't want to take.

Now, let's talk about the risks of not running background checks. Picture this: You skip the screening process and accept the first applicant who seems friendly and eager to move in. Without background checks, you're gambling with the future of your property and your income.

One of the most immediate risks is delayed or missed rent payments. Without the assurance that your tenant can afford the rent, you might find yourself in the awkward position of chasing them down for money month after month. This can wreak havoc on your cash flow and cause unnecessary stress.

You may also end up with tenants who consistently violate the lease terms, causing friction with neighbors and potentially costly legal battles to regain possession of your property. Evictions are not only time-consuming but also financially draining. Finally, ignoring background checks can have broader community safety repercussions. Unwittingly renting to someone with a history of criminal activity or disruptive behavior jeopardizes your property and the safety and peace of mind of your other tenants and neighbors.

Related Read: Rental Application Fraud: How to Identify and Prevent Fraud

Running background checks on renters is a vital step to protect your property, your income, and the safety of your community. It's a small investment in time and money that can pay off in a big way by helping you avoid potentially costly and stressful problems down the road.

Let’s now examine the steps you must follow to run a background check for renters for your properties!

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1. Determine Screening Criteria 

To kickstart your tenant screening process, you'll want to define the rental criteria that you'll use to evaluate prospective tenants. What screening criteria should you consider including? You may check the applicant’s credit score, rental history, employment verification, criminal records, and eviction history. 

IMPORTANT NOTE: Ensure your selected criteria align with fair housing laws and state regulations. In some states, you cannot contact previous landlords. Inadvertent discrimination and other violations can also land you in hot water. Be consistent in your criteria and apply them uniformly to all applicants to avoid these challenges. 

2. Obtain Applicant Consent 

Once you lay out your criteria, you may think you’re ready to begin collecting data and running your checks, but you’ll need to hit the brakes one more time. Before collecting data, you must obtain written consent to run a background check from your applicant. 

Related Read: Improve Your Rental Application Approval Process with These 8 Tips

This consent is non-negotiable; you should provide them with the forms and disclosures required by local laws and regulations. This step is all about transparency and ensuring that your applicant is aware of and agrees to the background checks you're about to conduct.

3. Collect Applicant Data 

With the criteria outlined and consent received, you’re finally ready to gather your applicants’ data!

Provide applicants with a comprehensive rental form to fill out. The form should include sections for personal details, employment information, previous rental history, references, and any other details you wish to verify. 

If you're looking to streamline this process and go paperless, consider a user-friendly application tool like Intellirent. With our solution, you can easily build a custom application and collect all the specific information and documentation you need without the headache of dealing with traditional paper forms.

4. Run a Credit Check 

If you want to evaluate your applicants’ financial responsibility, you need to run a credit check using a reputable reporting agency. Your credit reporting agency will conduct a credit check on each applicant, providing you with insights into their credit score, payment history, and outstanding debts. 

Common credit check companies include TransUnion, Equifax, and Experian. When you partner with Intellirent, you’ll have a top-notch credit check through TransUnion integrated into your background check process. This step is pivotal in assessing an applicant's ability to pay rent regularly and on time.

5. Verify Employment and/or Income 

Related to the point made above, if you want to ensure your tenant can pay rent, you must ensure they have a stable source of income. You can verify their income and employment in a few different ways.

  • Contact the applicant’s employer to verify their employment status, income, and length of employment. 
  • Request written confirmation or pay stubs as proof of income. 
  • Remember that not all applicants will have a traditional W-2 job, so be open to alternative forms of income verification, such as tax returns, bank statements, or other financial documentation.

Related Read: When to Use a Guarantor Application: 4 Examples

6. Contact Previous Landlords* 

Checking an applicant's rental history is another key piece of the puzzle. Contact their previous landlords to gather information about their payment history, adherence to lease agreements, and any past issues or complaints. This information can help you identify potential sources of conflict or challenges with your applicants.

*Be aware that this step is illegal in some states, so double-check your state's laws and regulations before proceeding.

7. Run a Criminal Background Check 

If you want to attract high-quality renters and fill vacancies quickly, ensuring the safety and security of your property and community is critical. 

Engage a professional background check service or screening agency to conduct a criminal background check on every applicant. This check will reveal any criminal convictions or pending charges. It’s important to note that prior criminal convictions need not automatically disqualify an applicant, but having this information can help you gain critical context into the people applying for your property. 

8. Review and Evaluate Results 

Once you've gathered all the background and credit check results, it's time to roll up your sleeves and review your results! 

Compare the information against your predetermined screening criteria to determine if the applicant meets your standards. This step is all about making an informed decision based on the gathered data.

If you’ve used Intellirent for your background check process, you can easily compare Renter Resumes to see how your applicants stack up side-by-side.

9. Select and Notify Your Applicant! 

After a thorough evaluation, decide whether to accept or deny each applicant. Communication is key at this stage of the process. Be sure to inform the applicant promptly and in accordance with local laws. 

If their application is denied, explain why clearly and include information about their rights to access the background check report. Transparency and adherence to regulations are crucial throughout the entire background check process, but they are especially vital in this final stage.

Running a Background Check for Renters Without Breaking a Sweat 

Running background checks can seem like a hassle, but it’s an essential stage in the rental process to ensure your properties find their way into the hands of high-quality renters.

Want to take the complexity out of background checks? Try an advanced tenant screening tool like Intellirent!

With Intellirent, you can build listings, post them to dozens of top-tier listing sites, accept applications, and automatically run them through background check processes using our Renter SmartMatch program, all within the same platform.

What’s more, Intellirent is always free for property managers!

To see how Intellirent can save you time and frustration on your renter background checks, create a free account today and get started!  

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