Tenant Screening

4 Tips for Effective Tenant Screening

The success of your rental business depends on many factors. Some you can control, like your hard work, financial decision-making, or how you treat your tenants. Other factors are outside your control, like your tenants’ behavior.

Fortunately, there is a way to protect yourself from the unforeseeable risks that tenants may contribute: tenant screening. 

Checking the boxes for income, credit, criminal, and eviction checks reduces risk-taking substantially. You can rest easy knowing that your tenants don’t have any lurking evictions or criminal convictions in their past.

Speed also matters for tenant screening. The faster you can screen your tenants, the shorter vacancy and tenant turnover periods you’ll experience, and the more cashflow you can achieve. 

Here are four tips for maintaining an accurate, efficient screening system.

1. Use a Tenant Scoring System

A tenant scoring system is a weighted point system for assessing the eligibility of your applicants. You assign each factor (income, credit score, etc.) a positive or negative point value and then calculate a score for the applicant. 

There are many tenant scoring templates available online, but you can also create your own.

The main benefit of a tenant scoring system is that it forces you to quantify or specify your eligibility criteria. Decisions based on ambiguous standards or a “gut feeling” have no place in housing. You should base tenant acceptance/denials on clear, objective standards, preferably in written form. This way, if there’s ever any doubt about the fairness of your screening practices, you’ll already have written documentation to prove your decision was just.

Tenant scoring systems also make decision-making fast. It’s quicker to compare two numerical scores than a set of unstandardized factors.

2. Know the Fair Housing Laws

Fair housing is one of your most important responsibilities as a landlord. Several landmark laws dictate how you can screen tenants, advertise rentals, and show units. 

Your familiarity with these laws matters; they should guide your actions and decision-making as a housing provider.

Federal fair housing laws include the Federal Fair Housing Act (FHA), the Fair Credit Reporting Act, and the Americans with Disabilities Act (ADA). There are also numerous state and local fair housing laws. Contact local authorities to find out which ones apply in your area.

Below are some of the main tenants of fair housing laws:

  • Landlords are prohibited from discrimination based on any of the seven protected classes: race, color, religion, sex/gender, national origin, familial status, and disability. Many states add age, marital status, veteran status, and citizenship to the list.
  • Landlords must provide reasonable accommodations to disabled tenants (such as allowing service animals)
  • Landlords may not show preference for a kind of tenant in rental advertisements.
  • Landlords must inform applicants of all vacancies.
  • Landlords cannot steer applicants toward or away from any units.

3. Don’t Skip Steps—Especially References

Tenant screening only works when you don’t skip any steps. 

You need as much information as possible to get a complete picture of an applicant. This means verifying proof of income and employment, performing credit, criminal, and eviction checks, and calling current/previous landlords and employers.

References are the most tempting step to skip. You might think that if a renter provided references, they are most likely on good terms with them. This might be true, but you never know what you’ll learn by speaking to a reference. 

One step you can safely skip is social media screening. While there’s plenty to learn on an applicant’s Twitter or Instagram page, it’s much harder to standardize those checks. What happens if an applicant’s account is private, or they don’t have one at all? If you’re looking to save time during screening, social media is one step you can cut. 

4. Use Property Management Software

Automation is key to speedy screening. This is made possible with property management software. Many platforms offer tenant screening services so you can view complete reports of your applicants in one place. 

Skip the complications of navigating county, state, and national criminal records or tracking down eviction histories. Property management software lets you consolidate all the screening components. 

Before you begin, find out which reporting agencies your software platform partners with (TransUnion, Experian, and Equifax are the big three for credit). By verifying that the source of the information is trustworthy, you can save time, screen faster, and limit turnover.

Making Effective Tenant Screening a Habit

Tenant screening is your first defense against late rent, poor behavior, and future arguments. Skipping even one step could lead to a legal or financial nightmare down the line. On the flip side, a habit of careful screening can drastically improve the quality of your tenants. Now that you have the tips and tools to do so, you can make tenant screening a route to success in your rental business.