This is part 8 of our Landlord’s guide to Tenant Screening. If you’ve landed here directly don’t worry — we cover everything you need to know about rental background checks below.
A rental background check is like an x-ray that allows you to see beneath the surface of a potential tenant.
This image might ring a bell for nostalgic Simpsons fans.
Perhaps you remember the time Homer went to the doctors for an x-ray.
What Is A Rental Background Check?
Where Do Credit Bureaus Get Their Data?
What Does A Rental Background Check Consist Of?
The tenant applicant enters this information. All of this information is required except the middle name.
Read this if the applicant does not have a social security number or is unwilling to provide it.
The personal details provided in this box are important because there are only three main identifiers for any person:
- Date of Birth
- Social Security Number
With over 325 million U.S. residents it’s best to get all three identifiers.
Stephen White is the name of our CEO here at RentPrep and the last time we checked there were over 2,600 matching names in the U.S. database.
This means it is still possible to have two Stephen White’s with the same exact date of birth.
This is also provided by the tenant and is important information. This current address should match the information provided on the rental application.
It’s a good idea to get understanding of the applicant’s current living situation.
Do not assume that they’re currently renting as they might own their current home and are going through a divorce or perhaps they live with family currently.
A simple pre-screening question such as “Do you currently rent, and if so, where?” should help you better understand their current situation. It’s a good idea to keep notes throughout the tenant screening process so you can reference back to them later.
With our SmartMove reports, the tenant applicant will write in their income.
At this point, the applicant should be well aware of your rent to income ratio.
Your minimum income requirements should be laid out in your tenant screening criteria.
You’ll want to check the following:
- Does the income listed on the rental background check match what they listed on their rental application?
- Do they meet your minimum income standard?
A good TransUnion Resident Score that you can have confidence in ranges from 538 to 850.
Here is a look at scoring ranges to consider when screening a tenant:
Decline: 350 – 523
Low Accept: 538-559
Accept: 560- 850
A credit score is a compilation of many factors. TransUnion has created its own ResidentScore that is tailored to the rental industry.
This is done by giving more weight to payment history as this information is more important to a landlord.
There is usually a discrepancy between the credit bureaus and what they report for a credit score. Each bureau uses a different FICO model to assess credit.
This breakdown is specific to the TransUnion ResidentScore used with SmartMove. If your applicant runs their own credit through a different service, the numbers may differ.
For instance, Credit Karma uses a VantageScore model where TransUnion SmartMove is based on a FICO model.
The FICO model is a much better model (in our opinion) because that it was the large majority of banks use when they assess credit for a mortgage.
Credit Karma knows that their customer wants to see a better score. If they featured lower credit scores using the classic 2004 FICO model they wouldn’t retain as many users.
Similar to the address history the employment history records are cultivated from large databases.
These records are not verified, so it’s important that you call the current employer to verify information.
In the video above our CEO, Steve White, walks you through how to do an employment verification call.
The ways criminal records are to be considered is changing in many areas. It’s important to check your local laws to make sure there aren’t additional considerations placed in your area.
We covered this in detail on the tenant screening criteria page in that you should no longer use a blanket criminal policy with your rentals.
However, criminal records are permissible screening tools if you can create a nexus (fancy word for connection) between a criminal record and why someone wouldn’t be a good renter.
When you order a rental background check the data gathered from criminal records comes from courts all over the country.
With our SmartMove reports, there are over 200 million records searched at the State and Federal level.
A background check will gather all available criminal data that is reportable.
A criminal record is reportable for up to 7 years under the rules of the FCRA.
A criminal conviction is reportable indefinitely.
Difference Between An Arrest And Conviction?
Arrested – This states you were taken into custody but doesn’t necessarily mean you were convicted.
Charged – This is the next step where the prosecutor’s office will make a decision whether to charge you. This states criminal charges you are facing.
Convicted – The person has been proven or declared guilty of the offense.
Sentenced – This is when a formal judgment is issued that spells out the punishment.
Why Does The Type Of Criminal Record Matter?
HUD spells it out clearly that you should not deny an applicant based solely on an arrest without conviction.
“A housing provider who denies housing to persons on the basis of arrests not resulting in a conviction cannot prove that the exclusion actually assists in protecting the resident safety and/or property.”
This 10 page HUD document boils down to two paragraphs in the conclusion.
“Policies that exclude persons based on criminal history must be tailored to serve the housing provider’s substantial, legitimate, nondiscriminatory interest and take into consideration such factors as the type of the crime and the length of the time since conviction. Where a policy or practice excludes individuals with only certain types of convictions, a housing provider will still bear the burden of proving that any discriminatory effect caused by such policy or practice is justified. Such a determination must be made on a case-by-case basis.”
Basically, if you’re going to use a criminal record in your screening you must make a viable case for why that crime jeopardizes the resident safety and/or property.
Tenant Screening Checklist
Understanding Tenant Screening Laws
Tenant Screening Criteria
Advertise Your Rental Property
20 Questions To Ask Potential Tenants
Showing Rental Property To Prospective Tenants
Free Rental Application Form
What Does A Rental Background Check Consist Of
5 Problems with Tenant Screening Services