What is a Tenant Background Check? How is it Helpful?

Background checks have become an important tool in the United States. Today, there are various types of checks that one can perform, which reveal accurate data that is gathered from official resources. 

One of the most popular background checks is a tenant background check that many landlords perform regularly. Whether you are a tenant or a landlord, you need to get yourself familiar with this check, and how it can help you.

What is a Tenant Background Check?

A tenant background check is a screening process that a landlord or property manager may conduct on a prospective tenant in order to assess their suitability as a tenant. The check may include various types of information and verification, such as: 

• Criminal History: A criminal background check looks at any potential tenant's criminal history. The landlord, nearby residents, and other tenants are all protected by doing this.

• Credit history: A credit check enables a landlord to assess a tenant's capacity to make on-time rent payments. An increased likelihood of missed rent payments may be indicated by bad credit history.

• Verification of employment: The landlord may check the tenant's employment history, income, and present employment status to determine whether they can afford the rent.

• Rental history: In order to determine whether the tenant has a history of evictions, lease violations, or other problems, the landlord may also look into their prior rental history.

• A driver's license or passport, another kind of government-issued identification, might be used by the landlord to confirm the tenant's identity.

A tenant background check is done to give the landlord the information they need to decide whether or not to rent their property to a particular applicant. 

It's crucial to examine local rules and regulations because different states have varied laws regarding the kinds of information that landlords can access and utilize during the tenant screening procedure.

Why Perform a Tenant Background Check?

A tenant background check is intended to give property owners information about potential renters or buyers. Aside from the details listed above, one can also avoid common tenant scams, such as:

False identity scams

In order to rent a property, a tenant may give false information regarding their employment, income, or identity. They might offer a bogus employment letter or false identification papers, for instance. If the tenant defaults on their rent or damages the property, the landlord may have trouble finding them, which could be an issue.

Scams involving phishing

In a phishing scam, a renter may get an email or message posing as the landlord or property manager and requesting private information such as social security numbers or bank account information. The tenant might give out the information under the assumption that they are speaking with the real landlord, which can be utilized for identity theft or other fraudulent acts.

Bait-and-switch

A renter may make an offer to rent a property and then, after moving in, swap the payment to a different account or person. For instance, after the check has cleared, the renter might change the payee on a check made out to the landlord.

Rent-to-rent

A renter may cost a home with the goal of subletting it to other tenants, frequently at a higher rent, in a rent-to-rent scam. This might be problematic for the landlord, who might not be aware that the property is being sublet or who might be receiving less rent than they are entitled to because it is unlawful in many areas.

Rent-skimming

In a rent-skimming scheme, a renter might monthly a property using a fictitious lease or rental agreement and then keep the rent payments from the real landlord by collecting rent from other tenants. The landlord can be losing money because they are unaware that the renter is not paying the rent.

Scams involving advance payments

A tenant may be requested to pay an upfront payment—such as a security deposit or rent—to secure a home that doesn't truly exist. Even if the tenant sends the money, they might not get the keys to the house and may find it difficult to get their money back.

Landlords and property managers need to be on the lookout for these scams and take precautions to safeguard themselves. 

This may entail confirming the tenant's identity, performing an exhaustive background check, contacting the tenant's references, paying with a secure payment method, and, if necessary, consulting an attorney. 

Landlords and property managers can lessen the possibility of falling for a renter scam by being proactive and implementing these safety measures.

How is Tenant Background Check Performed?

A landlord or property manager often conducts a tenant background check to evaluate the suitability of a potential tenant. Although the procedure can change, it normally consists of the following steps:

Obtain written permission: Before doing a background check on a potential renter, the landlord should get that person's permission in writing. This can be done via a separate consent form or a rental application form.

Information gathering: The landlord should ask the potential tenant for basic details such as their complete name, birthdate, and current address.

Conduct a criminal history check: The landlord has the option of conducting a criminal background check themselves or by contracting a third-party company to do the work for them.

Verify credit history: By ordering a credit report from a credit reporting service, the landlord is able to check the credit history of the potential tenant.

Verify the potential tenant's employment and income by getting in touch with their company and checking out pay stubs or W-2 documents.

Review rental history: The landlord may inquire with prior landlords about any evictions or lease violations in order to review the potential tenant's rental history.

Make a choice: With all the facts in hand, the landlord can decide with confidence whether to rent the property to the potential renter.

It's crucial to keep in mind that different states have different rules governing the kinds of information that landlords can access and utilize during the tenant screening process, so it's crucial to verify local laws and regulations.

Landlords must adhere to the guidelines established by the Fair Credit Reporting Act (FCRA) while performing tenant background checks. The FCRA establishes rules for the collection and use of credit information.