How to Choose a Tenant Screening Service
Whether you have an apartment for rent, a house, or even a business space, screening the tenants that want to rent it is crucial. You can learn so much about what your experience with a tenant will be like by receiving and interpreting information about the tenant’s rental history, among other factors.
Here, we’ll take a look at what most screening services offer, what types of checks landlords may want, and some things to be wary of when selecting a tenant screening service.
Functions of Tenant Screening Services
So what does a tenant screening service do? It’s important to be aware of what these services can do for landlords and tenants alike, and what their primary function is.
First and foremost, a tenant screening service allows landlords to receive information about a potential tenant’s rental history, credit history, evictions, past criminal activity, and more. This allows landlords to understand more about their potential tenants and make an informed decision on which tenant to rent their unit or property to.
It’s important to have some information about the tenant before renting to them. Just because a tenant looks great on paper doesn’t mean that they’ll be a good tenant. Potential renters with the right income, respectable jobs, and great personalities may have a string of evictions, lease violations, and even past convictions following them around.
Landlords have no way of knowing if the information that a tenant provides them with is accurate without verifying it through a screening program. There truly is no way to learn if the tenant is telling the truth without running these checks.
It’s up to the landlord to decide how much weight each report carries, but having all of the information available can help protect the landlord against damage, fraud, evictions, and bad tenants. Though it isn’t always a 100% accurate way to assess what a tenant will do, it can go a long way towards avoiding disastrous results.
Tenant Screening Service Features
Most tenant screening services offer similar reports, with different details, records, and sources. Here are some of the most common tenant screening service features offered across the board.
A credit report is usually provided by one of three main credit bureaus. These organizations are responsible for gathering financial information about the tenant, including if they’ve made payments on time, the length of any credit lines, debts, collection accounts, and more.
A credit report is only as good as the score that is provided. Some tenant screening services don’t provide a full credit score – in this instance, they will usually ask the landlord for a range of credit scores that will ‘pass’ the screening. If the landlord specifies that they won’t rent to anyone with a credit score under 550, then the tenant will only fail the credit check if their score falls below this number.
On the other hand, the screening service may provide a full credit report including the score. The level of detail varies depending on where the report is coming from, but for the most part, it will contain information about open accounts, credit and tradelines, a payment history, and if there have been any late payments made on the open accounts. It may also contain information about accounts in collections, including the number and amount.
Together, this information can tell a landlord if a tenant is financially responsible and creditworthy, and can help them determine if the tenant will pay the rent on time.
Criminal Background Checks
Criminal background checks are another important component of most tenant screening services. As with credit reports and all other reports offered by any given company, the level of detail can vary wildly from one service to the next.
Unfortunately, the type of information reported also varies between services. Some standard offerings include past convictions, types of crime and criminal activity, and may include database checks. Databases checked may include:
- The National Sex Offender Database
- The Office of Foreign Assets Control Database (OFAC)
- Most Wanted Lists
- SSN Fraud
- And more.
Each company will have different databases and reports that they run, and they may be run on the state, county, or national level. Each level may provide different information, with diminishing returns. State and county courts are different, so the state court may report crimes tried in a county court… or they may not.
Be sure to carefully consider which checks that are run when it comes to criminal information to make sure that all possible information is discovered through the service.
These reports specifically alert the landlord if the tenant has been evicted from any past residence. Reports may include only evictions that result in a judgment, or they may report on all eviction filings (even filings that were resolved without an actual eviction).
If a tenant has been evicted before, they may be again – so this is a critical check when screening a potential tenant.
It’s also worth noting that the information here may not always be entirely correct, as evictions are rarely filed with the tenant’s social security number. Most filings only have the tenant’s name and the address they were evicted from, so it’s important to make sure that any eviction information that the reports turn up actually belongs to the potential tenant in question.
These three different types of reports can be the most useful when determining if the tenant is a good fit for a property, though not all landlords will want the same information when screening a tenant. It’s important to make sure that the report you choose has the type of information that you require for approving a tenant.
Tenant Pay vs Landlord Pay Options
Some tenant screening services will require that landlords pay for the screening, but most will offer a tenant pay option. This means that the landlord won’t have to pay to generate the results – the tenant must pay when they complete the application.
There are a few different ways that tenant pay options benefit landlords. For one, it acts as another screening process. If a tenant is serious about renting the property, they will have no problem paying the application and screening fees. On the other hand, a tenant who balks at paying these fees may not be the best fit.
Secondly, landlords who screen a large number of tenants will be pleased with this option. If the landlord pays for each screening, there’s a chance that a large number of applications will be rejected. The landlord loses money if they continually pay for screening services for tenants who aren’t going to be renting the property.
Allowing the tenant to pay the screening fee can make it easier for landlords to screen more tenants without taking a large income loss – which they likely already are if the property isn’t collecting rent.
Things to Consider Before Choosing a Tenant Screening Service
Before choosing a tenant screening service, there are a few additional things that landlords should consider. It’s worth keeping these things in mind while you shop around for various screening services, as taking them into account can help you get closer to a screening service that works best for you.
What Type of Landlord are You?
While it may seem like a silly question to ask, a landlord’s needs change based on the type of properties they are renting. Commercial landlords will want different information on potential tenants than apartment landlords, for instance. Here are special things that each type of landlord should consider before choosing a service.
- Apartment or Multifamily Landlords may want to pay special attention to criminal background checks, as someone with a violent history could put the entire complex or community at risk. They also might want more in-depth eviction information, as evictions are lengthy, expensive processes that may harm the overall financial health of the business.
- Home Rental Landlords should focus on credit score and income. Homes generally rent for more than apartments and are more likely to be owned by a private owner (even if the rental is handled through a realty company). If a tenant needs to be evicted, there may not be other properties to contribute to the landlord’s income. In addition, making sure that the tenant doesn’t have a history of property damage or lease violations can also be beneficial.
- Commercial Landlords will also want credit and financial information, as well as information about the business credit and financial solvency of the business that wants to rent the space. Knowing that the business is a legal and profitable business can help a commercial landlord know that they’ll be paid.
What Do You Expect Out of a Tenant Screening Service?
This is one of the first questions that anyone who is ordered a tenant screening service needs to ask themselves. The answers can shape every aspect of the screening experience and make choosing a company to provide services that much easier.
There are options available across the board that lean more towards certain information. Once you know what you want, it’s much easier to choose a service that provides it.
Things to consider when thinking about your expectations include how fast you want the results, what type of information you’d prefer to receive, and how you’re going to conduct tenant screening in relation to your application process.
How Much Do You Want to Pay for Screening Services?
The prices for screening services vary greatly between companies. Having some idea of how much you want to pay (or how much you should charge the tenant) makes it easier to decide. Some companies offer individual reports rather than packages, which can make it easier to target specific information or create a roster of very specific reports.
When this happens, it can get expensive. Packages often offer these reports at a discount when they are bundled together. Choosing a package will almost always be less expensive if you want multiple different reports or types of information. This is something to watching out for.
Also, consider the fact that some tenants won’t want to pay for expensive screening services. After a certain threshold (about $50 per tenant, in most cases), some tenants may find the screening process too expensive – and you can lose a lot of good tenants this way. Keep this in mind.
How Much Do You Want the Tenant to be Involved?
Generally, tenant screening reports use two models.
In the first model, landlords only need an email address for the tenant. The service will send the tenant an email address with a link and an invitation to complete the screening process. From there, it is up to the tenant to enter their information (including social security number, address, and employment information for most services). When they submit their application, reports are usually available to the landlord instantly.
In the second model, the landlord has to enter all of the tenant’s information. The landlord must also submit a consent form and may require underwriting privileges (granted by the tenant screening company after a round of verification and an on-site inspection). Reports are instantly available and require no tenant approval beyond the consent form.
This is something to keep an eye on when making a decision for screening services. If you want to be in control of every aspect of the screening process, it may require being underwritten. Leaving it up to tenants may result in slower responses if there are responses at all.
However, allowing the tenant to enter their information is better for them, as it doesn’t count against their credit. If the landlord enters the information, it counts as a hard inquiry that could negatively impact their credit score.
Our Tenant Screening Service Rating System
Each tenant screening service package that we’ve reviewed gets a rating in four categories, and then an overall score that indicates how it stacks up to other packages. Here’s how we rate them.
Our four categories are as follows:
- Predicts Tenant’s Ability to Pay: This is our most important category, and carries the most weight towards the final score. The quality and availability of credit reports, income information, and employment verification influence this category.
- Predicts Tenant’s Likelihood of Criminal Activity: Our second-most important category will help the landlord determine if the tenant is prone to criminal activity. The quality and availability of criminal reports, background checks, fraud checks, sex offender and other database checks influence this category.
- Predicts Tenant’s Likelihood of Eviction: Information about past evictions can help landlords avoid costly and time-consuming evictions in the future. The quality and availability of eviction records and some criminal records influence this category.
- Accessibility/Ease of Use: This category carries the least amount of weight when it comes to rating tenant screening services. This is influenced by how easy it is to access reports, how easy the reports are to read (as a lot of information can lead to crowding), and if they are laid out in a user-friendly manner.
Each package is rated on a scale of 1-10 for each of these categories, and every factor is considered when choosing how to rate each part of the report.
Tips for Choosing a Tenant Screening Service
So you’ve read through all of the services that your chosen screening service offers, you know what package you want, and you’re getting ready to make your final purchase.
Here are a few last things to consider before finalizing your choice.
- Check Sources. Many tenant screening companies will list their sources. It’ll tell you where they get their information, what databases they check, and which court systems they may pull their information from. Make sure that the sources they’re using are legitimate, and that they are likely to return the most useful information.
- Check Range. Make sure that you’re choosing the service that offers the widest-reaching checks and scans so that you get all of the information possible. This may mean that the results aren’t instant, but the results (if there are any) will be more in-depth, particularly with criminal records.
- Beware of Individual Charges. While most tenant screening services offer packages that allow the landlord to order several reports at once, some only allow reports to be ordered separately. In this model, each report has its own price – and it can add up quickly. To avoid overpaying, make sure that there is a reason to. If these individual reports offer information that another company may not, it can be worth purchasing, but most packages may contain the same checks at a discount.
- Mind Your Application Process. If tenant screening is going to be part of your application process, it might be a good idea to require that the tenant pays for it. This way, if a tenant fails the background check or the credit check, you won’t be losing any money.
- Keep Security in Mind. Most tenant screening services let you know if they encrypt your information, so keep an eye out for this message. This means that your information will be safe, and only the people who need to see it will have access to sensitive details like social security number and date of birth.