What Can a Landlord Look for in a Background Check?

Background checks
Background checks are becoming more common for many reasons. And while we often hear about background checks being used for employment, rental background checks are also growing in popularity.

The reality is that landlords often have difficulty finding reliable tenants who care for the property and pay rent on time every month. And renting to the wrong person can be a financial disaster for many property owners. For example, you could end up with someone who destroys the property, leaving you with high costs for remodeling and repairing it. Or you could have tenants who don’t pay, and while you can evict them, the legal process takes time and resources.

As these examples show, renting to the wrong person can be costly, whereas having the right tenants can make your income properties actually result in income! For this reason, many landlords now conduct rental background checks.

A landlord or property management company conducts rental background checks to determine whether a rental applicant is a good fit for the rental property. In pursuing this, rental background checks often include specific information, such as:

  • A credit report: Landlords or property managers will pull a credit report from one of the three major credit bureaus (TransUnion, Equifax, Experian). A credit report contains data from your creditors, such as banks, credit card companies, or other lenders. This data can tell the landlord how responsible the individual is with their current and past financial commitments. Additional elements of the credit report that landlords look at include:
    • Credit score: A credit score with ranges that indicate whether their credit is Bad, Poor, Fair, Good, or Excellent. A credit score is an easy way to quickly determine how responsible the individual has been. But be wary of placing too much importance on good scores. For example, a good score may be achieved for someone who has very little credit history. Alternatively, factors such as credit inquiries may have a negative impact on the credit score that has nothing to do with their past financial performance.
    • Tradelines: Tradelines are accounts on a background check or credit report and can include any revolving or installment accounts.
    • Collections: Your credit record will show any tradelines that went unpaid long enough to be sent to collections. Accounts that commonly go to collections include utilities, credit cards, medical debt, and cell phone bills. Some claims that go to collections may result in garnished wages.
    • Consumer statement: If an individual wishes, they may add a consumer statement to explain certain findings in their credit record. If available, this statement will appear during a rental background check.
    • Inquiries: Your credit report will also list any credit inquiries recently issued for your credit record.
  • Personal details: Rental applications often request personal information, such as name, date of birth, and possibly the Social Security number. With millions of residents in the US, it’s possible to have multiple people with the same name and date of birth, so it is advisable to get additional personal details. This information is verified by a background check.
  • Current address: The current address found during a rental background check can confirm the current address for the applicant matches the information they provided in the application.
  • Applicant’s income:A tenant’s rent-to-income ratio can strongly indicate their ability to pay the required rental payment each month. A background check can confirm that their income matches what they provided on the application.
  • Address history: Many background checks can extend far back enough to identify multiple past addresses. This portion of the background check can also indicate whether the potential tenant will likely stay in the rental for a while or if they have a tendency to move around frequently.
  • Employment history: Employment history records can also tell the landlord or property manager whether the individual is generally stable and reliable.
  • Public records: Public records often include bankruptcies, civil judgments, and tax liens that may impact one’s income.
  • Eviction records: These records will contain any information about an eviction record that exists for the applicant. Previous rental history is a good indication of how the renter may behave in their new rental unit.
  • Criminal records: Rental background checks often include looking at criminal records, which can raise a red flag to any dangers present when renting to the individual.

Rental background checks may not be as rigorous as pre-employment background checks, but they are still subject to many of the same regulations, which can be complex. To learn more about how your rental company can benefit from background checks, contact USA Fact today!

USA Fact Global Screening Services provides comprehensive background and criminal checks for employers that comply with federal and local laws. By helping you eliminate high-risk applicants through tailored solutions, USAFact enables you to create a safe and productive work environment and a foundation for future success.