Screening applicants is a key element in the rental process, since it keeps you from getting bad tenants that would complicate property management. Many landlords rely heavily on credit scores, but that is only one part of a tenant’s story.
A strong screening process goes beyond just a calculation of your applicant’s spending and payment habits. Assessing their behavioral and rental background is just as important if you want to ensure that you’re getting a quality tenant.
Key Highlights:
- Credit scores only show financial history, but they do not reveal tenant behavior, rental conduct, or compatibility with other residents.
- Strong screening should evaluate income, employment stability, and debt-to-income ratio to ensure consistent rent payments.
- Rental history and landlord references help uncover patterns like late payments, lease violations, or property damage.
- Eviction records and criminal background checks should be reviewed carefully, with attention to context, severity, and recency.
- A well-rounded screening process protects your property, reduces management issues, and helps you select responsible, long-term tenants.
What You’ll Miss by Relying on Credit Scores
Relying on one factor alone is a disservice to your property and your potential tenants. Here are some of the things you'll miss by limiting the scope of your background check.
Tenant Behavior
A tenant can have a good credit score but not have the ability to play well with others. They may be able to pay rent on time, but they can still cause a plethora of problems like property damage, tenant disputes, noise complaints, and more.
On the other hand, an applicant with a low credit score doesn’t automatically mean they will always pay rent late. Anyone can be a medical bill or a single financial hardship away from a bad credit score, and it does not completely reflect who they are as a tenant.
Employment and Income
While many of the basic screening criteria look into the past of an applicant, it is your primary concern as a landlord to ensure consistent rent payments. Even with a bad credit history, some tenants are still capable of paying rent regularly.
Income verification confirms their ability to pay now, and reviewing a tenant’s debt-to-income ratio provides better insight into whether they can realistically afford your rental property. Limiting yourself to past behavior can make you miss out on good tenants.
Rental History
Credit scores reveal the financial aspect of an applicant’s past, but reviewing their rental history allows you to reveal patterns of their behavior. You can learn that by calling previous landlords to ask for references.
You can uncover issues like repeated late rent payments, property damage, property neglect, or early lease terminations. You can either interview them about these violations or reject their application to avoid these issues from happening to you.
Which Criteria Should You Use?
Credit Score
It does not paint the whole picture, but there’s a reason why landlords use it as a criterion. It shows an applicant’s payment history and debt levels. You can set a minimum score to streamline the process, but be sure to also evaluate the context, such as medical or student debt, as opposed to unpaid housing debts.
Employment Verification
The applicant should provide the employer contact information, length of employment, and position in the company or business. This gives you an idea about whether they can pay their monthly rent and if they have a stable job history. It’s recommended that you look through at least 6-12 months of employment history to show strong proof of security.
Rental History and Landlord References
By looking through their rental history with the support of landlord references, you can verify their payment consistency, lease violations, property condition upon move-out. You can also verify their notice compliance. Past rental behavior can predict future behavior, and the last thing you want in your rental property is a tenant who constantly causes problems for you or your other tenants.
Eviction History
Evictions are not always caused by tenant violations. If there are evictions in a tenant’s history, be sure to review what prompted them. Some of the red flags you should look for include court-filed evictions and unlawful detainer cases. You can state the limit for prior evictions before an applicant is automatically denied from the rental application process.
Criminal Background Check
Criminal histories matter when you want to protect your property, yourself, and your other tenants from potential harm. It’s important to check an applicant’s convictions during the tenant screening process, including the severity and type of offense, and the time since the incident. Just remember not to implement blanket bans. Evaluate whether the crime and its recency have any relevance to housing safety.
Debt-to-Income Ratio
The debt-to-income ratio typically shows an applicant’s total monthly debt payments, credit card balances, car loans, and other forms of loans. It allows you to see more into a person’s financial stability. Even high earners can struggle to pay rent when they are leveraged with debt. This, along with income verification, shows whether they can afford to rent your property or not.
Tenant Screening FAQs
What should I include in my tenant screening criteria?
- To have a more comprehensive screening process, you should at least have the basics, such as credit history, employment verification, rental history, previous landlord references, criminal history, and debt-to-income ratio.
Should I immediately deny a rental applicant if they were convicted of a crime?
- You first need to assess whether the crime and its recency affect housing safety. A blanket ban can result in Fair Housing violations, which can cost you significant legal fees and damage your rental business’s reputation.
Can I hire services to handle tenant screening?
- Yes. There are available tenant placement services that can help you with the rental process, allowing you to focus on the day-to-day operations of your rental property.
What happens if I skip the tenant screening process?
- Screening tenants helps you keep bad renters out. Skipping it can lead to late rent payments, property damage, and tenant complaints. This will ultimately affect your cash flow and property value.
Expert Tenant Screening is a Call Away
Conducting the tenant screening process correctly will not just result in your getting good tenants. With an efficient and effective system, you can achieve occupancy faster. At Harcourts Avanti, you can rest assured that you will get the RIGHT tenants. You want what’s best for your investment property, and we do too.
Contact us, and learn more about the extensive services we offer!