Does Your Tenant Screening Report Seem Incomplete?

Are you worried that the tenants you’re placing haven’t been adequately screened?

You have them fill out applications. You ask for supporting documentation. You have a few conversations with them to get a sense of who they are and why they’re looking for a new home. 

But, what if something’s missing? How can you be sure they haven’t buried the most alarming details of prior rental experiences? 

Tenant screening is complete when you have an honest and accurate assessment of an applicant. You know their financial history, their credit history, and whether or not they’ve been evicted or sued for damages from former landlords. 

One of your top priorities is finding reliable tenants who will care for your Winston-Salem rental property and pay rent on time. When it comes to tenant screening, many property owners rely on reports that provide a snapshot of a potential tenant’s history. We recommend digging a little deeper and establishing consistent rental criteria against which every applicant will be measured. 

Tenant screening is a critical step in protecting your investment and maintaining a positive cash flow, but a report that lacks important information could leave you vulnerable to the wrong tenant. In a growing and competitive rental market like Winston-Salem, knowing what to look for, and what might be missing, could make a big difference.

As professional property managers, owners and landlords come to us for the most comprehensive screening, which we’re able to provide thanks to our years of experience and our automated technology. Let’s take a look at how you know your screening report might need some work.

Quick Summary: Establish qualifying rental criteria for every applicant to meet before they’re approved. Basic screening includes checking income, employment, and credit. Advanced screening moves into eviction histories and rental references. Fraud and dishonesty is on the rise, so make sure you’re working with accurate information by verifying everything you find in the screening reports.

Before You Screen: Establish Qualifying Rental Criteria

In order to screen tenants effectively and completely, you have to know what you’re looking for.

Setting clear and consistent qualifying rental criteria is one of the most essential steps in managing your rental properties. These criteria serve as a baseline against which all applicants are measured, helping you make fair, informed decisions about who you invite to live in your property. Not only does this protect your investment, but it also ensures that you remain in compliance with fair housing laws, while enabling transparency and building mutual respect with potential tenants.

1. One of the primary reasons landlords should establish qualifying rental criteria is to create a standardized approach to tenant selection. Without clear criteria, it’s easy to make inconsistent decisions that could lead to biased outcomes or legal complications. Whether you’re reviewing credit scores, income levels, or rental history, having set standards ensures that each applicant is treated equally. This minimizes the risk of accusations of discrimination or unfair practices. By establishing these standards upfront, you give all applicants the same opportunity to demonstrate their suitability for the property.
2. Well-defined rental criteria help landlords stay in compliance with fair housing laws, which prohibit discrimination based on race, color, national origin, religion, sex, disability, and familial status. These laws are enforced at the state and federal level, and they require rental property owners to use objective, non-discriminatory methods when selecting tenants. If a landlord’s standards are vague or subjective, it can open the door to unintentional bias or even legal challenges. Having written, transparent criteria that apply to everyone ensures you can defend your decisions if a dispute arises.
3. Setting clear rental criteria also establishes expectations for potential tenants. When applicants know exactly what you’re looking for, whether it’s a certain credit score, a history of timely rent payments, or stable employment, they are better prepared to present their qualifications. This transparency not only builds trust but also streamlines the application process. Tenants can decide whether they’re a good fit before applying, which saves both parties time and reduces the likelihood of misunderstandings.

In the end, defining your qualifying criteria is an essential component in the screening process, and an important part of how we decide whether tenants are a good match for your property. It keeps us objective, fair, and consistent.

Basic Screening: Employment, Income, and Credit

There are a few things that almost all landlords will do when screening a tenant. You’re probably doing them already. 

There are many factors that contribute to a tenant’s suitability, and these three key areas should always be carefully examined. We’re talking about income verification, credit history, and employment information. These areas give a comprehensive snapshot of a potential tenant’s financial stability and responsibility, helping landlords make more informed decisions. Here’s a closer look at why these three factors matter and why you’ll want to evaluate them effectively.

Verifying Income One of the primary considerations when evaluating a tenant is whether they can afford the rent. After all, no matter how reliable a tenant might seem, if they can’t pay the rent, it can quickly turn into a problem for both the tenant and the landlord. Verifying income ensures that the applicant has the financial means to meet their monthly obligations. Start by requesting recent pay stubs, tax returns, or bank statements to verify income. Most landlords look for tenants who make at least three times the monthly rent in gross income. This general rule helps ensure that rent is affordable without taking up too much of the tenant’s budget. It’s also important to be mindful of the tenant’s debt obligations. An applicant who is struggling with other financial burdens might still have trouble making timely rent payments, even if their income technically meets the standard. For self-employed individuals, income verification can be trickier. In these cases, we like to ask for tax returns or profit-and-loss statements to get an accurate picture of their earnings. Regardless of the applicant’s employment status, make sure you have clear documentation.

Credit Reports  A credit report is a window into a tenant’s financial habits and responsibility. While it doesn’t paint the complete picture, it’s one of the best tools for understanding how a potential tenant manages debt and handles financial obligations. A strong credit report can indicate that the applicant has a history of paying bills on time, while a poor credit report might signal past issues with managing money. When reviewing a tenant’s credit, focus on a few key factors: payment history, credit utilization, and any outstanding collections or bankruptcies. A history of late payments or accounts in collections can raise red flags. However, it’s important to understand that some tenants may have had financial setbacks in the past due to circumstances like medical emergencies, a divorce, or job loss. In these cases, it can be helpful to ask for an explanation or review other aspects of their application, such as income or rental history, to determine whether they’ve since improved their financial situation. Keep in mind that the type of credit report you receive may vary. Always pull a full credit report.

Employment Employment history is another critical area of tenant screening. A stable job can indicate that the tenant has a reliable source of income, which is essential for consistent rent payments. You’ll want to verify both the length of employment and the type of job to get a sense of their job stability and earning potential. For a tenant to be considered financially responsible, you’ll want to see that they’ve been employed for at least a year at their current job. A job that has high turnover or is seasonal might signal instability. During the screening process, ask the applicant for details such as their position, salary, and the length of time they’ve been with their current employer. This information helps you gauge whether their income is likely to remain steady. Before you make any calls to confirm employment, make sure you have the tenant’s permission to do so. You can collect that by having them sign the application and agreeing to any background checking that you may do during the screening process.

By focusing on income verification, credit history, and employment information, landlords often make quick decisions that could potentially protect both their rental property and their peace of mind. 

But these three factors alone don’t provide a complete picture. They form a solid foundation for assessing whether a potential tenant is financially responsible and capable of meeting their rent obligations. A thorough screening process helps minimize the risk of late payments, evictions, and other costly issues, leading to a more successful and stress-free rental experience.

Beyond Basics: What Your Screening Report May be Missing

While those basic and traditional tenant screening reports are a great place to start, these reports may not provide a full picture of an applicant’s background. As a landlord, it’s essential to dig deeper and ensure that you’re not missing any critical information that could affect your decision.

Dig a little deeper, and make sure you’re gathering enough application details to ensure there is no misinformation or fraud.

• National Eviction Database: Why It’s Crucial

One of the biggest red flags that might be missing from a standard tenant screening report is whether an applicant has a history of evictions. While a background check can give you general information about an applicant’s criminal record and credit history, it won’t always tell you if the applicant has been evicted in the past. This is where checking the national eviction database becomes vital.

An eviction can be a sign that a tenant has had trouble paying rent or has been a problematic resident in the past. It’s important to understand the circumstances surrounding an eviction, whether it was due to non-payment, lease violations, or other issues. By checking the national eviction database, you can ensure that you’re not renting to someone who has a history of disregarding lease agreements or causing problems with previous landlords.

Eviction records often stay on file for several years, and some jurisdictions may even allow you to access eviction records from multiple states. If you don’t check for past evictions, you could end up renting to someone with a history of not honoring lease terms. This can be both financially costly and time-consuming if issues arise after they move in.

When you cannot access national records, reach out to a Winston-Salem property management team like ours. We have a vast network and some great technology that allows us to run an eviction check across the country.

• Terrorism Watchlist: Protecting Your Property and Community

While it might seem like an unlikely issue, it’s important to screen for whether an applicant is listed on the terrorism watchlist. Landlords are required to ensure that they do not rent to individuals who are involved in or suspected of terrorism-related activities, especially in compliance with U.S. government regulations.

The Office of Foreign Assets Control (OFAC) maintains a list of Specially Designated Nationals (SDNs) and Blocked Persons, which includes individuals and organizations that are prohibited from engaging in business transactions due to national security concerns. This list can be checked against tenant applications to ensure that your prospective tenant isn’t involved in any activities that could pose a threat to national security, your property, or your community.

While this may not come up often, and it may even seem extreme, the goal is to make sure you’re not leaving anything out of your tenant screening process. Taking the extra step to check the terrorism watchlist helps you stay compliant with federal laws and avoid potential legal ramifications. Even a single missed step in tenant screening could lead to serious consequences.

• Sexual Offender Registry: Ensuring Tenant Safety

Tenant safety is one of a landlord’s top priorities, and one of the most important screenings you should conduct is checking whether an applicant is listed on the sexual offender registry. This registry contains information about individuals who have been convicted of sexual offenses, which can include serious crimes like sexual assault, molestation, or harassment.

Failing to check the sexual offender registry can create significant risks for other tenants, especially in multi-family buildings or neighborhoods with families. As a landlord, it’s your responsibility to ensure that your tenants feel safe in their homes. If you allow a sexual offender to rent your property without conducting a thorough background check, you could be putting both your tenants and yourself at risk of legal liability.

This part of screening is about awareness. Depending on your local laws, there may be certain restrictions on where a registered offender can live, and there are sometimes specific disclosure requirements that landlords must follow.

• Checking Rental References

One of the simplest ways to verify whether an applicant is a good tenant is by checking their rental references. While many landlords ask for references from previous landlords, this step is often overlooked. We can understand why. It may feel awkward or intrusive to reach out and ask questions. 

We like the idea of references because we want to hear how tenants have behaved in rental properties previously. Was rent paid on time? Were the lease terms followed? Were there disputes?

To get an accurate picture of an applicant’s rental history, contact the references directly. Make a phone call or send an email. Previous landlords can provide valuable insight into an applicant’s behavior that a standard screening report might miss. It’s also helpful to ask the landlord if they would rent to the applicant again, which can be a strong indication of how well the tenant performed during their lease.

Be cautious if you encounter a situation where the applicant’s rental reference seems vague or if the applicant provides limited contact information for their previous landlords. These may be signs that the applicant is trying to hide something from you.

Verifying Application Details: Preventing Misinformation or Fraud

You have to ensure that the information on the application is accurate and truthful. Tenant applicants sometimes misrepresent themselves or provide falsified information to improve their chances of being approved. Common areas where fraud occurs include:

• Income levels
• Employment status
• Criminal history

As a landlord, it’s essential to verify the applicant’s information. If something doesn’t match up on the credit report you run, or there seem to be gaps in residency, follow up. You want to make sure the applicant is not hiding anything that may reflect negatively upon them.

While standard tenant screening reports are helpful, they don’t always give you the full picture. By taking the extra steps to check the national eviction database, terrorism watchlist, sexual offender registry, and rental references, you can make a more informed decision. Additionally, verifying the information on the rental application will ensure you’re not falling victim to fraud or misinformation.

Tenant screening is not just about placing a tenant and collecting rent right away. When it’s done correctly and thoroughly, tenant screening allows owners to choose a responsible, reliable tenant who will respect your property and be a good neighbor. By covering all your bases, you protect yourself, your tenants, and your investment.

Contact us at Capstone Realty Consultants if you find your tenant screening isn’t as complete and comprehensive as you’d like it to be.