Why do I need tenant screening?
You might be tempted to ask, “Do I really need one of the best online tenant screening services?”
This skepticism is certainly justified. Like any smart landlord, you’re looking to cut costs wherever you can – especially when you consider that tenant screening can be very pricey if you’re running a background check on multiple applicants for each property. The costs can stack up quickly.
Furthermore, tenant screening isn’t an instant process. It takes time to gather and review all the reports, and you’ll need time to make a decision. You are forgiven for thinking that tenant screening is a costly and tiresome endeavor.
The advantages of the best tenant background check services far outweigh their cost, however. You’ll get better tenants who pay promptly and treat your property responsibly.
The lack of proper tenant screening can have terrible consequences for your property. Missed payments, damaged property, evictions – all stressful and costly situations that can potentially make your property unrentable for a certain period of time. That’s an expensive proposition.
That’s why we say tenant screening credit checks and other background checks are worth every penny.
Credit checks give you invaluable insight into a potential tenant’s financial history and current situation. Do they pay bills on time? Have they filed for bankruptcy? Are they in debt? How often have they struggled financially, and what kind of debt are they in now?
The best criminal background check services are equally important. A tenant with a serious criminal record might pose a significant risk not only to your property but to neighbors and other people around them.
Employment and eviction histories are also a crucial part of tenant background checks. Previous evictions are almost always a red flag, and probably a sign that you should avoid the tenant. The benefits of verifying the applicant’s current employment status are obvious: You can see whether the renter will have enough income to pay rent in the first place.
Of course, all the information gained from the best background check for landlords services should be analyzed as part of an overall evaluation. While serious criminal offenses are a definitive sign not to take on a renter, smaller violations – especially in their younger years – could be looked over. The same goes for debts: The size of debts and whether they’re connected to credit cards, student loans, or medical expenses make all the difference. A few late rent payments aren’t the end of the world if there’s a good reason.
Methodology
When determining what are the best tenant screening services, we’ve relied on our trusted evaluation methodology to find the greatest service providers on the internet.
Identifying the most affordable and best tenant screening services isn’t a clear-cut process. Much of it depends on your personal preferences, the amount of money you’re willing to spend, and what kinds of background check package suits your needs the most. Here are the metrics and features we focused on in our reviews.
Credit checks
One of the most common – and arguably the most important – types of background checks is the credit check. In the US, the credit score is one of the most important representations of a person’s financial standing. As we conducted our best tenant screening services reviews, we looked at whether the service offers to conduct credit checks, how much time they need to fetch the report, and how credit checks fit into the company’s pricing plans.
Most of the time, you really shouldn’t consider screening services that don’t offer credit checks. Credit checks represent the main way to look into a would-be tenant’s financial history and discipline – current and past credit accounts, outstanding debts, third-party collections, missed payments, and so forth. Employment status reports usually come with credit checks as well.
Credit scores and credit reports are two different things. Some screening services only offer to request an applicant’s FICO score – a single numerical representation of the applicant’s creditworthiness. Other companies that provide the best background check for landlords offer credit reports – a much more detailed look into a person’s current and past credit, debt, and other relevant data.
In most cases, a credit check requires the tenant’s written permission (the signature on the rental application is usually counted as valid permission.) Another thing to keep in mind is that when it comes to credit checks, there are hard and soft “pulls.” A credit check based on a hard inquiry will show up on the applicant’s credit history and may deduct a handful of points from the applicant’s score.
While some of the best tenant screening sites make hard inquiries, most initiate soft ones. Soft inquiries don’t alter the prospective tenant’s credit score in any way. While hard pulls only slightly impact the credit score, it is a kindness to applicants to avoid such unnecessary inquiries when possible.
FCRA compliance
The Fair Credit Reporting Act of 1970 is a federal law that serves to guarantee the accuracy and fairness of credit reporting. At its core, it serves to protect the rights of those whose credit is being checked by a third party. It also includes a guarantee that people can get free copies of their own credit reports periodically. The best FCRA tenant screening services provide accurate and fair credit checks for tenants, minimizing the risk of wrongly representing credit scores or disclosing scores without the prospective tenant’s authorization.
FCRA compliance is not just important – it’s mandatory. The penalties for breaking this law can be steep. In 2018, RealPage Inc. paid $3 million in a settlement for failing to take all the precautions necessary to provide accurate credit reports. Hence, FCRA tenant screening services are the only ones to consider.
Criminal background check
The best rental background check covers the applicant’s criminal history. Tenant screening companies scan various government databases to check whether the person in question has a criminal record of any sort.
In addition to the risks of renting to people with criminal pasts, having tenants with criminal records can cause trouble between you and insurance companies. While you’re not legally obliged to run criminal background checks, the insurance company may refuse tenants with a criminal record, increase premiums, or cancel your policy.
Ideally, you want the screening service to scan both state and federal databases. Many screening services scan law enforcement most wanted lists and the sex offender registry as well, giving you a more complete report.
Residence and eviction
Bulk tenant background checks are not complete without residence and eviction history checks. These records give you direct insight into how the applicant previously acted as a tenant.
First off, the current address can tell you what kind of situation they live in now and whether they’ll be able to pay the rent. If they’re currently living at their parents’ home or at a friend’s place, they may be in a financial bind and unable to make timely rent payments. Be sure to use judgment in this situation, however, as student debt, the coronavirus pandemic, and locations with high rental costs have persuaded many perfectly fine potential tenants to live with their parents for a while before striking out on their own.
The best tenant screening websites usually offer to provide you with a list of the tenant’s past addresses, as well as their eviction history, if any. This can give you lots of relevant input into whether you should consider renting your property to one applicant or another. In most cases, residence and eviction history are considered the most important parts of background checks a renter screening service provides, next to the credit score.
Reporting
While all of these background checks are extremely important, the quality and speed of the reports are also paramount. If the service takes a long time to provide the reports, it can significantly slow down the whole process and your prospective tenant can be moved to another address before you learn of their sterling qualifications. In our tenant background check reviews, we focused on finding services that give you results as soon as possible.
Another thing to check is which databases the service consults. For credit reports, there are only three options: Experian, Equifax, and TransUnion. However, a criminal history report could include or exclude many state and federal databases. The conventional wisdom holds true here – when it comes to data sources, the more the better.
Pricing
Finally, we have prices. Tenant screening services do not come cheap. However, we’ve focused on finding the best credit check for landlords that provide the most value for the money.
Pricing is generally structured in two ways. Some sites offer a la carte pricing, which means you can conduct the needed check for a one-time fee. Others bundle various services into compact packages. You’ll also find recommendations for free tenant checks, but these are limited in scope and not detailed enough to be truly useful. None of them earned a place on our list of the best services.
