What Is Tenant Screening | Definition & Examples

What Is Tenant Screening | Definition & ExamplesAny property manager knows how much a good tenant is worth.

And they know how inconvenient a bad tenant can be.

That is why finding a good tenant is extremely important. And, to do that, we use tenant screening services.

Tenant screening allows property managers and landlords to gather relevant information.

But, not every landlord knows how to properly conduct them, or how they even work.

Luckily, in this article, we will be discussing everything there is to know about tenant screening, including how to get one and how to use it.

To begin, let's go over a general definition of what tenant screening is.

What Is Tenant Screening?

Tenant screening services give landlords and property managers a way of learning about applicants to gain a variety of important information.

That information is key to figuring out if that applicant would make a good, responsible tenant.

For example, information you can get from various tenant screening services include:

• Criminal background
• Credit and payment history
• Evictions

The tenant screening service itself uses a variety of means depending on the service, typically by using digital methods of combing online databases. Most services return what is called a tenant screening report, which we will discuss below.

Tenant Screening Reports

A tenant screening report is essentially the result of screening a tenant. This document contains a plethora of information about the tenant, including:

• Credit Report
• Employment History
• Criminal History
• Rental History

…and much more.

This report is then used to help the landlord decide if the prospective tenant should be allowed to rent their property or not.

However, it is important to make sure that you are getting this information from a reputable source. This is because of something called the Fair Credit Reporting Act (FCRA), explained below.

Fair Credit Reporting Act

The Fair Credit Reporting Act is a federal law that helps ensure the accuracy and fairness of consumer credit information. It also regulates the way that credit reporting agencies collect, access, and distribute consumer reports.

It is also used to alert prospective tenants if their application is being rejected because of information that was found in the credit screening. Landlords and property managers should know about this law as it could potentially open them up to lawsuits.

So, talking about landlords, why do they even want to screen tenants?

In the next section, we will talk some more about why landlords conduct tenant screenings and why they are so important.

Why do landlords need tenant screening services?

Without tenant screening, you’re liable to attract less responsible tenants who:

• Don’t take care of the unit or property
• Don’t pay their rent on time
• And are generally higher maintenance, sucking up your time, money, and patience

Tenant screening isn’t a perfect system, but it ensures you’re far less likely to accept an applicant that won’t be a good fit for you. 

The result: a property filled with great tenants who won’t make you keel over from stress. 

Now, if you are interested in screening a tenant, but are not sure how, we got you covered.

In the next section, we will be going over the general tenant screening process and how it should be conducted.

Tenant Screening Process

In this section, we're going to explain the steps that you should be taking for the best tenant screening experience. Keep in mind that every situation is different, so it is important to evaluate your own needs first.

Rental Application

The first step in any tenant screening process is to require rental applications for your rental property. When you begin to receive these rental applications, you can begin to rule out tenants that are an obvious no.

However, for those applications that seem promising, they should move on to the next step of the screening process.

Credit Reports & Background Checks

The next steps in the tenant screening process are credit reports and background checks.

A full credit report will provide a deep insight into a candidate's credit, including:

• Types of credit accounts
• Credit score
• Payment history
• Credit limits

…and much more.

The criminal background check, on the other hand, includes different information such as:

• Eviction History
• Employment Report
• Rental History

…and anything else that was specifically requested.

If a tenant has had an eviction in the past, landlords can also request an eviction report. This contains a lot of information about the eviction, and can help you understand the circumstances for it.

Verification

The next step in the screening process is employment and income verification. Some of the best tenant screening services will provide an income insights report for you, but if not, you will have to ask the tenant for it yourself.

It is important, however, to watch out for fake forms of verification. If the tenant tries to use a fake form of verification, you should use your discretion to either reject the tenant or contact the authorities.

Personally Screening Tenants

The next, and almost final, part of the tenant screening process is to personally screen them. This means having an in-person discussion with them to ask some final questions.

Some questions that can be asked during this interview include:

• Do you have pets?
• When do you want to move in?
• How many people will live in the unit?
• Have you ever had trouble with a rental agreement in the past?

…and anything similar.

It's very important that, during this interview, the questions stay professional and nothing intrusive is asked.

Finalize The Agreement

The last step in the tenant screening process is to finalize the agreement with the chosen tenant.

Finally, they will be able to sign the lease agreement that both parties have agreed upon and begin to plan their move-in. Hopefully, you followed the tenant screening criteria very closely and will enjoy a top-notch tenant for the next year.

But, one thing is always of concern for property managers - the cost.

Below, we will discuss the average cost of tenant screening services.

How much do tenant screening services typically cost?

While this all might sound great, one pressing question in the back of your mind is likely pricing.

Tenant screening services are a cost, and I’m sure you’re up to your eyelids with costs to manage your properties already.

However, they’re well worth the investment given how much money they’re likely to save you in bad or less favorable tenants. Tenants you may have otherwise accepted without a good screening process in place. 

Fortunately, prices are low, typically ranging from $20-35 per applicant.

You can keep that cost even lower by screening the most promising applicants first, so you only incur a cost on those applicants you screened. 

Bottom Line

Any experienced or unexperienced property manager must acknowledge the importance of good tenants.

And now, they know exactly how to find them.

We hope that your search for tenants goes well and that you only accept the best tenants possible.