Updated June 2021
Tenant screening is crucial for landlords, but does that mean it needs to be an expensive part of the business? Whether you have property managers handling tenant screening or do it yourself, you need to know what tenant screening costs your business will incur.
Many landlords hear tales of the hours of research required to find the best tenant screening prices and to figure out which reports best fit their needs.
Why is finding the right tenant screening service so complicated?
Most likely it is because there are so many types of tenant screening services and, unfortunately,there are also a large number of companies that are trying to make a quick buck off the rental market.
However, after taking notes on tenant screening costs and services, we’ve compiled the best quick reference guide to choosing your tenants background check service.
A Table Of Contents On Tenant Screening Costs
Tenant screening costs can be difficult to understand when you don’t know what’s going on behind the pricing. Learn more about the average costs and what you should try to get from tenant screening with our complete guide.
- Average Tenant Screening Pricing
- What’s Included In Tenant Screening Costs?
- Are Free Tenant Background Checks Legit?
- What’s The Cost Of A Background Check For Renters?
- Credit Check Cost FAQs
- Can a landlord charge for a background check?
- Are property managers responsible for credit check costs?
- How long does a tenant screening report take to come back?
- Should credit check cost affect renting costs?
- How much does it cost to run a credit check at RentPrep?
- How much does a tenant background check cost at RentPrep?
Average Tenant Screening Pricing
Average tenant screening pricing can be hard to parse out as these fees range depending on what information you are looking to get back about a tenant.
However, the short answer to how much does a tenant screening cost is $15-$40, depending on the searches.
Of course, you’ll see some screening prices outside of this range, but it’s usually best to avoid anything that is too cheap or too expensive without good reason.
Never pay less than $15 because it’s most likely a novelty site and not FCRA compliant. This means that as a landlord, you can’t use it. Using a non-FCRA compliant screening could get you in trouble with severe fines to pay.
If you are paying more than $40 for a tenant background check, however, then you’d better be getting every search possible, along with the screening company making phone calls on your behalf. Various tenant screening options cost over $40, but they do not all give comprehensive information.
Deciding What Type Of Screening You Need
How do you know when the right time is to spend more on a tenant screening package or, rather, when you should settle for something with less detailed information?
The best way to do this is to slow down and think about precisely what you want to use as your screening criteria. What is essential for you as a landlord to know when determining if a prospective tenant is the right choice for your rental property?
First, you need to decide if you want criminal and eviction data.
Most screening companies base their various tenant screening packages on these reports, and you need to decide whether or not this information is important to you.
Next, choose what type of financial data you want on your applicants.
Your choices usually include a full credit report, a decision model (pass or fail reports based on credit scores), or public records such as bankruptcies, judgments, and liens.
To better understand which of these items you want to use for your own tenant screening criteria, keep reading to learn more about the reports included in tenant screening packages.
What’s Included In Tenant Screening Costs?
As mentioned, tenant screening packages include different information, and what information you want in a report often determines what the final tenant screening costs will be. Landlords don’t always want the same type of personal information about their tenants, so companies have different packages available.
Do you want to know what a full credit check costs, or are you more interested in finding out about criminal background before approving a prospective tenant?
Learn more about each type of report that you can consider when determining what tenant screening reports to run on applicants.
Full Credit Reports
Full credit reports allow you to see the complete credit history of a tenant. This information includes the exact credit score, trade line histories, public records related to credit, as well as a history of addresses.
The complete credit history of any potential tenant may also include information that you, as a landlord, cannot use to make your decision. For that reason, full credit reports are only available in specific situations and cannot be simply filed for by any landlord.
Fully Credentialed Commercial Space
If you are operating out of a commercial space (not a home-based office) and you have passed a full credentialing with a site inspection, then you can file for complete credit reports with the credit bureaus.
RentPrep’s TransUnion Full Credit Report, formerly known as SmartMove
Another way to see a full credit report for prospective tenants is to use our TransUnion Full Credit Report product, formerly known as SmartMove. The catch with this Transunion Full Credit Report, formerly known as SmartMove full credit report, is that it relies on the applicant responding to an email and entering their personal info. For this reason, the annual completion rate is between 50–75%.
However, it can be helpful to use a product like the TransUnion Full Credit Report, formerly known as SmartMove, even if it has a less-than-perfect completion rate. Why? Because those prospective tenants who are willing to respond to the email and sign up for this report are eager to show they’re fiscally responsible—and that’s just the kind of tenant you may want in your rental.
Another type of report you can often get from tenant screening companies is a decision model report. Our RentPrep Background Check includes this type of report, and many landlords find it a more approachable resource.
These reports are typically branded as “credit checks” or “credit models.”They are algorithms that use credit info, such as scores, to create a pass/fail based on your limits and criteria. It is important to know that you will NOT see the raw credit details with these reports. Ever. Read the fine print as many screening companies dance around this fact.
However, don’t necessarily write off this type of report simply because you will not see the exact credit score.
In fact, reliable tenant screening companies that use a score range or pass/fail judgment can be helpful for landlords. Rather than needing to make sense of complicated credit histories, you can simply decide yes or no based on the information provided.
Public records are another category of items that you may want to see when considering potential tenants. Knowing how financially and socially responsible a tenant has been can be very helpful in determining if they are going to be a reliable tenant for your rental property.
Public records may include bankruptcies, judgments, and liens. Much of this information is available to everyone without any crazy hoops to jump through or credentialing, just written consent as always.
However, having a tenant screening service gather the data after getting tenant permission is usually much faster than trying to pull together this information on your own.
While public records don’t show a score, they are often great indicators of someone who has a troublesome financial past.
Criminal And Eviction Data
Finally, you may want to get a full criminal report that includes criminal records and even nationwide eviction information from various online databases. These are, by far, the most important report choices that will affect pricing for tenant background checks. Any other reports, like OFAC, Person Search, SSN Verification, etc., are usually standard because they are cheap.
On the other hand, this type of data requires more specific digging and can take more time for a tenant screening company to provide.
After you decide what information you want, look for the tenant screening company to bundle or package up the various reports. In most cases, this will help to stretch your dollar and give you lower prices.
Are Free Tenant Background Checks Legit?
In the past few years, we’ve seen an influx of free tenant background checks. These can be misleading due to the fact that they’re not really free. They might be free to the landlord, but someone has to pay for the background check.
It’s like saying dinner is free because Mom and Dad picked up the bill.
If you are not paying for the background check as the landlord, then your prospective tenants are going to be footing the bill. It’s not good practice to send applicants to a site to complete their personal information without warning them that they will need to pay for the report.
In fact, it might even make you look like an unreliable landlord and turn some good tenants away.
Make sure that you are aware of the fine print of any background check site that you may want to use. Being fully informed is key to making sure that not only is the site safe to use, but also to ensuring that you can properly alert applicants about what the procedure will be.
What’s The Cost Of A Background Check For Renters?
The cost of background check for renters depends on whether you decide to pay for all tenant applicant screenings or if you prefer to have each applicant pay for their own screening. There isn’t a right or wrong answer for who should pay for the background check, but there are some considerations.
Who should pay for the background check will depend a lot on your situation, preference, and location.
If you have a rental in a high-demand location, you shouldn’t have any problem having a tenant applicant pay for a $35 background check and credit report.
However, if your rental is in low demand, you may weed out a couple of good applicants if you’re charging upfront for those checks.
If you find you’re having trouble filling your rental, you may want to consider lowering your price, improving your marketing, and paying for the background check as the landlord.
This video below can prove helpful if you’re having trouble determining the price of your rental.
RentPrep’s Tenant Screening Services
When choosing between reliable tenant screening services, our services here at RentPrep should definitely be on your list.
We offer two screening packages to landlords.
Our TransUnion Full Credit report gives you all of the information you need about the tenant’s credit history, including background checks, criminal information, address history, and a nationwide eviction check. You can easily add judgments, liens, and income verification as additional checks. Plus, you also have the option for tenants to pay for this report.
Our smaller package is the RentPrep Background Check, a report which doesn’t require the tenant to respond to any emails. Once you have their personal information and permission, you can get basic information such as intel on any evictions, judgments, or liens. Add-ons also show you credit ranges, income verification, and more.
No matter what type of report you are looking for, we can help you get those tenant screening reports in the works today! Learn more about our packages and pricing right now.
Credit Check Cost FAQs
Can a landlord charge for a background check?
Yes, landlords are allowed to charge potential tenants to run a background check with their permission. Some states limit how much a landlord can charge to cover these costs, and all states require that landlords do not charge more than it actually costs to run the check. In California, for example, landlords cannot charge more than $35 for screening.
The idea is that you cannot charge more than is reasonable and appropriate to do the necessary background checks. Every state has its own specific guidelines about application fees and screening feeds, so be sure you are familiar with the rules in your area before charging any prospective tenants.
Are property managers responsible for credit check costs?
Your contract with your property manager will determine whether or not the cost of running screening reports is included in your monthly management fees or not. In many cases, the cost of a credit check may be something that is either passed on to the applicants or you will be responsible for it as the landlord as an additional cost.
Make sure that you find out who will cover this cost before your property manager does any tenant searching and screening for you. Otherwise, you might accidentally end up breaking your budget.
How long does a tenant screening report take to come back?
How long a tenant screening report takes will depend on a few different factors.
First, what type of screening report did you sign up for? If you signed up for a report that only covers the most basic information and does not need to involve the tenant, it should be ready fairly rapidly. Often, you’ll see this type of report back in as little as 24 hours, but that’s not always guaranteed.
If you are doing a more thorough screening that requires the tenant to log in and provide their personal information, it will take longer to come back. You won’t get this report until the tenant provides the information and the screening company can verify the report.
Make sure to let any prospective tenants know that you will be waiting on that report to make a decision. This will often help speed up the process for any tenants anxious to find a new rental.
Should credit check cost affect rental costs?
Landlords often wonder if they should build the cost of running their tenant screening into their rent. Ultimately, it is up to each landlord to decide if this is necessary. If you have decided to cover the cost of all tenant screenings, you might want to do this.
However, you should not directly add the cost of running tenant screening to the monthly rent as this is a one-time cost for each applicant, not a recurring cost. Instead, factor it into your overhead and then price it into your monthly rent.
How much does it cost to run a credit check at RentPrep?
Our full credit report, which includes the exact credit score of applicants, currently costs $40.00. The landlord or the tenant can pay this fee. See our pricing page for more details.
How much does a tenant background check cost at RentPrep?
Our basic background check package currently costs $21.00 at RentPrep. Check our tenant screening pricing information for the latest prices and information.
Takeaway: The Average Credit Check Cost For Rentals
While the average credit check will cost you between $15 and $40 in most cases, it is vital to have a deeper understanding of credit checks than just cost if you want to screen tenants successfully.
Tenant screening is critical as your income will be based on the reliability of your tenants. If you rent to tenants who are not financially reliable, it will be hard to continue to grow your business, and you may have to deal with evictions.
Take the time to learn about tenant screening and determine what type of tenant screening costs your business can handle. You won’t regret this investment!