What Is a Tenant Background Check (and Why is it Important?)
A tenant background check is a report detailing a prospective tenant’s rental, employment, credit, and criminal history. When a potential tenant applies for an apartment, the housing provider orders a background check to help determine whether they should rent to the applicant. These reports provide an idea of an applicant’s likelihood to pay rent on time and take care of the property.
Property management firms often run multiple checks simultaneously, while independent landlords typically screen one applicant at a time.
At Global Verification Network (GVN), we serve housing providers of all sizes with thorough investigative reports while staying FCRA-compliant. Our boutique, veteran-owned verification services company provides detailed screening to help our clients make an informed decision for their rental property.
What’s Included in a Tenant Background Check?
A complete tenant background check typically includes 5 core components: credit history, criminal history, eviction history, income and employment verification, and identity verification.
While these are the main components, not every check will be the same. Some tenant screening companies have additional services, such as asset checks and OFAC/Patriot Act sanctions screening, and most often provide different tiers of services catering to the property type, market, and housing provider’s risk tolerance. A basic check may focus on an applicant’s credit and criminal history, whereas a more comprehensive check includes eviction, income, and identity.
GVN provides custom tenant screening services that are built around the 5-component baseline and can include additional checks. For example, for high-value or commercial leases, we will perform in-depth checks that include reference interviews and license verification. Our goal is to help property managers and real estate agents fill their properties with great tenants easily and quickly.
Tenant Credit Reports: What Landlords Actually See on a Rental Pull
A tenant credit report shows an applicant’s credit score and history, which may include any missing payments, debt-to-income ratio, and credit accounts. With this information, landlords can see how financially responsible an applicant is.
Both FICO and tenant credit pulls help assess how likely a person will pay back their loan, but they’re not quite the same. A FICO pull is often used for home, car, and business loans, whereas a tenant credit pull is used for rental purposes. Because of this difference, many tenant screening services offer a score that’s particular to renting, such as TransUnion’s ResidentScore that predicts potential eviction risk.
According to Experian, applicants with credit scores that are at least between 600 and 650 are more than likely to qualify for rentals. Still, no single credit score guarantees a 100% approval rate since the threshold can vary by housing provider, unit type, and the market. Some independent property owners and smaller apartment complexes might even waive a credit check.
When credit pulls are performed through an FCRA-compliant screen service, they are registered as a “soft inquiry,” so there’ll be no damage to the credit score. At GVN, we run all credit pulls through compliant channels, ensuring peace of mind for both parties. Applicants will be less reluctant about a credit pull and landlords can get a better idea of an applicant’s credit.
Criminal Background Checks: What’s on the Report (and What’s Off-Limits)
A criminal background check shows convictions, misdemeanors, arrests, and pending cases from available local, state, and federal records. The data will likely be from recent years, since tenant background check companies generally cannot report negative information if it’s older than 7 years according to the Fair Credit Reporting Act (FCRA). However, they can report bankruptcies within the last 10 years, and criminal convictions have no time limit.
With the U.S. Department of Housing and Urban Development (HUD)’s 2016 guidance on upholding the Fair Housing Act and numerous jurisdictions restricting when and how landlords can ask about criminal history, housing providers must know relevant tenant screening laws to remain compliant when performing criminal background checks on applicants.
The licensed investigative professionals at GVN have experience interpreting criminal records in multiple states. We can provide a thorough assessment of a tenant’s records, even for real estate in mixed jurisdictions.
Eviction History Reports: What Shows Up and Where Coverage Gets Thin
A tenant eviction report may show eviction records that have a final judgment usually within a 7-year period. With coverage varying by jurisdiction and common errors in tenant background reports, an applicant might look different with one screening service than another. Applicants can correct these errors with the background check companies, but in some states, like Colorado, renters can opt for a Portable Tenant Screen Report (PTSR) that puts them in control of their information.
The background check services at GVN involve evaluating multiple sources to discover as much data as possible, even undisclosed evictions, so our clients have more information at their disposal.
Income, Employment, and Identity Verification
Landlords typically require tenants to earn two to three times the monthly rent and verify income through pay stubs, payroll data, employer letters, or—when applicants are self-employed or a gig worker—bank statements, tax returns, or 1099 documentation.
The professionals at GVN can dig deeper and verify an applicant’s income and employment status with hands-on methods, such as directly contacting the employer and checking professional applicants’ licenses, especially for higher-stakes or commercial leases.
Tenant screening reports also verify an applicant’s identity by matching self-reported information against data from a credit reporting agency. This provides landlords with added peace of mind, knowing that their tenant is actually who they say they are.
Red Flags Landlords Should Watch For — and How to Weigh Them
The biggest red flags landlords should look out for on a tenant background check include criminal records relevant to property risk, misleading or inconsistent information, evictions, and frequent moves.
A single red flag rarely is enough to deny a rental application. Landlords should evaluate findings against their existing screening criteria and determine which holds more weight. For instance, while recent eviction judgments may warrant concern, older dismissed cases will require additional context.
At GVN, we use investigative judgment to evaluate potential tenant red flags, so we can fairly decide how risky it would be for our clients to rent to an applicant.
FCRA Compliance and Who Actually Pays for the Check
When performing background checks on potential tenants, landlords must comply with the FCRA in the following ways:
- They must have Permissible Purpose—or a valid reason to request a person’s data from a reporting agency—and consent from applicants.
- If something unexpected comes up on the report that changes a landlord’s leasing decision, the landlord must notify the applicant, provide a copy of the report and the FCRA Summary of Rights statement, and give them time to correct any errors.
- If the landlord decides to take an adverse action—such as not renting to an applicant, requiring a co-signer on the lease, or asking for a deposit that would not be required for another applicant—because of findings from the background check, they must provide the applicant with an adverse action notice. This notice includes details about the screening company, how to dispute findings, and next steps to take.
Landlords who work with a boutique background check provider like GVN can rest assured that they always meet compliance while getting the information they need. 100% of GVN’s staff are FCRA-certified, with senior leadership holding the Advanced FCRA certification (top 1% nationally).
Usually, the tenant pays for the background check, though that may vary depending on the local rental market and laws. Some landlords might choose to pay to attract tenants, especially in a market where there are plenty of available units.
4 Questions Landlords Ask Before Running a Tenant Background Check
How Long Does a Tenant Background Check Take?
A tenant background check can take a few minutes or 1 to 3 days to process. More complex checks may take up to a week. Investigator-led reports, such as GVN’s more in-depth investigative work, typically require anywhere from 24 to 72 hours depending on scope.
How Much Does a Tenant Background Check Cost?
A tenant background check usually costs between $25 and $55 for simple tiers, whereas checks with higher tiers or boutique investigator-led reports with manual verification can cost more.
Can a Tenant Run a Background Check on Themselves?
A tenant can run a background check on themselves if they’d like to see what information shows up and address any inaccuracies. If they’re in one of the states that allow PTSRs, they can request their PTSR.
How Long is a Tenant Background Check Valid?
A background check reflects an applicant’s information only at the time it is completed. Because circumstances can change quickly, landlords should run screenings during each application process.
For PTSRs, they are valid for approximately 30 days from the date of creation, though it can vary by state legislation. For example, PTSRs are valid for 90 days in Rhode Island.