What Is A Rental Background Check?
A rental background check is an additional screening tool that allows landlords to see various aspects of a tenant applicant’s past behavior.
The majority of the data in our reports come from TransUnion.
This data helps to paint a picture of how responsible a tenant might be.
Some landlords look at the overall credit score while others pay specific attention to the details of the report.
Where Do Credit Bureaus Get Their Data?
Credit bureaus collect information from your creditors, such as a bank, credit card issuer, or auto finance company. They also get information about you from public records, such as property or court records.
What Do Our Tenant Screening Reports Consist Of?
Here is what one of our SmartMove rental background checks consists of:
Below we cover what each of these topics means and how you can understand and use the information provided in our reports.
The information in this section is required (except the middle name) to be filled out by your tenant applicant.
The personal details they must fill out include:
Date of birth
Social Security number
Current and previous address
As you can see in the screenshot above, we don’t share the social security number with you which helps protect you from liability.
Do not assume that they’re currently renting as they might own their current home or be living with family.
Tenant Applicant’s Income
The tenant applicant will be asked to provide their current employment and income.
Your tenant should be aware of your minimum income criteria already to help avoid wasting each other's time.
You will want to confirm these details with their listed employer.
Tenant Applicant’s Credit Score
The credit score is supplied by TransUnion and is also known as a “Resident Score”. This score ranges from 300 - 850.
You should have minimum criteria that all tenants must fit. For example, a score of above 700 is excellent, a score of 650 or more is good, and a score of under 600 might be cause for concern.
There are numerous factors that determine a person's credit score which we break down below:
TransUnion has created its own version of a credit score specific to the rental history which is known as a resident Score. This score gives additional weight to a tenant's payment history as this information is generally more important to landlords.
Because of this though there may be discrepancies between a resident score and a pure credit score.
Tradelines are current open lines of credit. The most common types are credit cards or things with fixed payment plans such as an auto loan or student loan.
The image above shows the possible tradelines associated with our SmartMove reports.
The report details each of their current tradelines and the associated payment history. Someone who has a lot of tradelines or regularly misses payments might be a red flag.
When someone misses payments on their tradelines then the account can be sent to collections.
The most common accounts are local utilities, credit cards, medical debts, and cell phones. Generally, if someone has tradelines sent to collections, this is a red flag. It means they failed to make their payments.
Creditors typically send an account to collections after six months of non-payment, but this time frame varies depending on account type.
Some collections can garner wages, meaning their actual take-home pay will be less than previously stated.
Credit inquiries are requests by businesses to check a person's credit.
Credit inquiries can be either “hard” or “soft”. Hard inquiries negatively affect the tenant's credit score. Our SmartMove inquiries are soft pull and do not affect the tenant’s credit score.
Common examples of a “hard pull” are when you apply for an auto loan or a credit card. If someone has multiple “hard pull” requests on their recent record it could be a sign that they are high risk as they are trying to open multiple lines of credit in a short period of time.
Public records consist of the following:
There are two types of bankruptcies:
Chapter 7 – These remain on a credit report for 10 years from the filing date because there was no repayment
Chapter 13 – These are deleted seven years from the filing date because there was partial or full repayment
Some landlords will make concessions for a Chapter 13 bankruptcy (such as an increased security deposit) but will not accept an applicant with a Chapter 7 on record.
If your applicant has a civil judgment this means they were sued and lost and owed a debt by the court.
Tax liens occur when a tenant applicant has not paid their taxes. Information will display alongside the public record if it is paid, discharged, or settled.
TransUnion did a study where they analyzed records from nearly 200 properties comparing tenants who were evicted to those who were not evicted. They found that renters with previous evictions were far more likely to be evicted a second time. Because of this many landlords look at prior renting and eviction history as an indicator of how they will rent in the future.
The eviction records in the report include:
State – The state where the eviction took place
Country – The county where the eviction took place
Case Type – Forcible Entry/Detainer is the legal wording for an eviction
Plaintiff – Typically the landlord, apartment complex, or property manager
Judgment Amount – If left blank there could be no judgment amount but if rent is owed this could end up here
Action Date: The date the eviction was processed in court
Name – The person’s name that was evicted
Address – The address they were evicted from
The ways criminal records are to be considered are changing in many areas. It’s important to check your local laws to make sure there aren’t additional considerations placed in your area.
Generally, when looking at the criminal records relating to a tenant landlords need to have a legitimate connection between how this might affect their ability to pay rent.
For example, if they have a traffic violation on their record this is unlikely to affect their ability to pay the rent and so would normally not be considered as part of your tenant assessment. However, if they work as a truck driver and they lost their job due to a traffic violation this could impact their ability to pay rent and may be a factor that you would consider.
Our SmartMove reports, search over 200 million records at the State and Federal levels.
Arrests vs Conviction
Arrested – This states you were taken into custody but doesn’t necessarily mean you were convicted.
Charged – This is the next step where the prosecutor’s office will make a decision on whether to charge you. This states the criminal charges you are facing.
Convicted – The person has been proven or declared guilty of the offense.
Sentenced – This is when a formal judgment is issued that spells out the punishment.
It is essential to understand the difference between arrests and convictions as the HUD says very clearly that you should not deny an applicant based solely on an arrest without conviction.
If you’re going to use a criminal record to make your final decision in your screening you must make a viable case for why that crime is relevant to them renting the property or jeopardizes the resident safety and/or property.
AKAs (Also Known As)
AKAs stands for “also known as” a maiden name is the most common example of an AKA.
If your applicant’s name is “Michael Smith” an AKA can be listed as “Mike Smith.”
In the criminal sense, if the person committed a crime under a known alias (or pseudonym), that alias would show up under this section.
Some people have a known alias that acts as a nickname while others have gone through the legal steps to change their name.