Most landlords have horror stories about previous tenants failing to pay rent, damaging the property or disappearing without paying the electric bill. Landlords can keep problems with tenants to a minimum, however, by conducting thorough background checks before offering a lease. The term "background check" can refer to a criminal record check, an eviction screening, a rental history check, a credit check or some combination of the above. A credit check often is a good place to start, with further options available as the situation warrants.
To check a potential tenant's credit, you'll need to get his permission. Have the applicant sign a boilerplate form available from one of the three major credit reporting bureaus, Equifax, TransUnion, and Experian. The fee to pull a report from one of these agencies typically is $30 to $50, but most states allow you to charge the tenant for the cost of the report. Just send in the form to the agency of your choice and you'll get a report back almost immediately.
Credit reports contain a wealth of valuable information, including the standing of the applicants credit cards and loans and if they've ever been evicted. It also will show if the applicant has been convicted of a crime.
It is illegal to charge an applicant a credit check fee if you use the money for any purpose other than checking his or her credit.
More Extensive Checks
It's usually legal to look up criminal records without an applicant's permission, but as with credit checks, it's best to secure the applicant's permission before conducting your research. You can hire another firm to perform this role for you, or take it on yourself.
Outsourcing the Process
Several companies offer comprehensive background check services for landlords trying to screen tenants. These services allow you to select exact what information you want to look for, although some information only is available in certain states. StarPoint, one of the larger companies, offers eviction screenings for as little as $10. ScreeningWorks, another major provider, offers a comprehensive package for about $30. The advantage to using a professional service is that they're usually much more thorough than the information you could accumulate easily on your own.
DIY Background Checks
If you're looking to save money, you can do a pretty thorough background check on a potential tenant using nothing but an Internet connection, a phone and some free time. Start by asking the applicant for his previous addresses and contact the property owner to ask if there are any outstanding debts or other problems. You also can check county and state court records to see if the tenant was ever involved in a lawsuit or a criminal prosecution. Usually, you can see if the applicant was ever arrested in that state as well.
Finally, ask the tenant for a list of personal references and contact them. An applicant unwilling to list a few friends or a former boss may have something to hide.