Tenant Screening Best Practices

Every applicant should complete a standardized written rental application. Your application should collect:

Personal Information: - Full legal name and date of birth - Social Security Number (for credit/background checks) - Government-issued ID - Current and previous addresses (last 3 years) - Phone number and email

Employment and Income: - Current employer, position, and salary - Length of employment - Previous employer (if less than 2 years at current job) - Other sources of income

Rental History: - Current and previous landlord names and contact info - Reason for leaving current residence - Any history of eviction

Consent: - Written authorization to run credit and background checks - Acknowledgment that false information is grounds for denial

Application Fee: Most states allow you to charge a reasonable application fee ($25-75) to cover the cost of screening. Some states cap this amount.

A thorough screening process examines five areas:

1. Credit Check — Run a credit report through TransUnion, Experian, or Equifax. Look for: - Credit score (650+ is generally good for rentals) - Payment history — consistent on-time payments - Outstanding collections or judgments - Bankruptcy filings

2. Background Check — Criminal history from a reputable screening service. Important considerations: - HUD guidance prohibits blanket bans on applicants with criminal records - Arrests without convictions cannot be used as grounds for denial - Many states limit how far back you can check (typically 7 years) - Each case should be evaluated individually

3. Income Verification — Verify that the tenant earns enough to afford rent: - Standard requirement: 3x monthly rent in gross income - Verify through pay stubs (2-3 months), tax returns, or employer letter - For self-employed applicants, request bank statements and tax returns

4. Rental History — Contact previous landlords and ask: - Did the tenant pay rent on time? - Did they maintain the property? - Were there any complaints or lease violations? - Would you rent to them again? - Did they give proper notice before leaving?

5. References — Personal and professional references provide additional insight into the applicant's character and reliability.

The Fair Housing Act (federal) and state fair housing laws prohibit discrimination based on:

Federal Protected Classes: - Race, Color, National Origin - Religion - Sex (including gender identity and sexual orientation per recent ruling) - Familial Status (families with children under 18) - Disability

Additional State/Local Protected Classes may include: - Source of income (Section 8 vouchers) - Age - Marital status - Veteran status - Student status - Political affiliation

Key Compliance Rules: - Apply the SAME criteria to EVERY applicant — no exceptions - Document your screening criteria in writing BEFORE you start showing the property - Never ask about religion, national origin, disabilities, family planning, or other protected characteristics - Reasonable accommodations must be made for disabled tenants (e.g., allowing a service animal in a no-pet property) - Advertising cannot express preference or exclusion based on protected classes

Penalties: Fair Housing violations can result in fines up to $100,000+ and civil lawsuits with actual and punitive damages.

After screening, you'll either approve or deny the application.

If you deny based on credit/background check results, federal law (Fair Credit Reporting Act) requires you to:

1. Provide a written adverse action notice 2. Name the screening company that provided the report 3. Inform the applicant of their right to dispute the report 4. Provide the screening company's contact information 5. State that the screening company did not make the decision

Best Practices for Decisions: - Use a scoring matrix or checklist to evaluate all applicants consistently - Document why each applicant was approved or denied - Keep all application materials for at least 2 years - Do not tell denied applicants the specific reason beyond what the adverse action notice requires - Return any unused portion of the application fee if required by your state

Red Flags That Justify Denial: - Income below 3x rent - Recent eviction history - Serious criminal convictions (evaluate individually per HUD guidance) - Poor references from previous landlords - Falsified application information