As a landlord, you want reliable tenants who will treat your property well and pay their rent on time. A background check won’t guarantee that, but it can help you evaluate potential tenants.
Tenant screening background checks need to be handled ethically and fairly, requiring you to find the right balance between protecting your investment and respecting tenants' rights.
A thorough background check includes credit history, rental history, employment verification, and a criminal background check. By responsibly screening applicants, you help maintain the quality and safety of your rental community.
Legal Considerations in Tenant Screening
There are federal, state, and local laws that you should be aware of before initiating a tenant screening background check:
Fair Credit Reporting Act (FCRA)
The FCRA requires you to obtain a tenant's written permission before running a credit check or background check. If you find any information in the credit report that causes you to deny their application, you are legally required to provide them with the information and why you turned them down.
The Fair Housing Act
The Fair Housing Act at the federal level prohibits discriminating against tenants based on race, color, national origin, religion, sex, family status, or disability. Several states also have their own laws, which extend protections further.
State and Local Laws
Some states have requirements about the use of background checks for tenants. For example, New Jersey and New York have restrictions on using criminal records in housing decisions. Other states limit access to eviction notices, depending on when they occurred.
There are also laws about collecting, storing, and handling potential tenant information, including background check data.
In some jurisdictions, local laws apply.
You should work with your legal counsel to determine what information you can seek and how it can be used.
Conducting Fair and Non-Discriminatory Background Checks
A fair and ethical tenant screening background check requires a standardized process that you apply to all potential renters. Here are some of the best practices:
Develop a Consistent Screening Policy
Outline the criteria for what constitutes an acceptable tenant. This policy should include guidelines on credit scores, income requirements, rental history, and acceptable criminal background results. Make sure this policy is applied consistently to all applicants to avoid potential discrimination claims.
Obtain Consent
Before conducting background checks, you must obtain written consent from the prospective tenant. This is a legal requirement under the FCRA and an ethical practice to ensure transparency in your background checks for tenants.
Focus on Relevant Information
Only consider information that is directly relevant to the tenant’s ability to pay rent and live up to lease terms. For example, a credit report can provide insight into a tenant’s financial responsibility, but a minor infraction from many years ago may not be relevant to their current suitability as a tenant.
Criminal Background Checks Responsibly
Criminal background checks can be a sensitive area. You need to use this information responsibly and avoid blanket policies that exclude all applicants with any criminal history. Consider factors such as the nature of the offense, how long ago it occurred, and whether it is relevant to the safety of other tenants or property.
Ensure Data Privacy
Securely store all sensitive information and only use it for the intended purpose of tenant screening. This helps protect applicants' privacy and reduces the risk of identity theft or other misuse of personal information.
Being a Fair and Ethical Landlord
Treating your potential tenants fairly is key to ethical behavior. You should communicate upfront about your tenant screening background check policies and practices. When you get a credit report with a negative finding—such as employment gaps or credit defaults that concern you—you should give applicants an opportunity to explain the situation before automatically rejecting them.
If you decide not to rent to someone based on what you find in background checks for tenants, you should provide a clear reason.
You also need to stay on top of changes to tenant landlord and housing laws at every level. They can change and have an impact on how you conduct screenings and how you use the information you find. It’s a good idea to review your policies and procedures periodically with your legal counsel.
Get Credit Reports for Tenant Screenings
You can get consumer credit reports for tenant screenings at Command Credit. With access to credit reports from Experian, TransUnion, and Equifax, you can pull reports on-demand and download them instantly.
You can pull a credit report from a single bureau or all three at the same time.
Contact Command Credit today to get started.