How to screen tenants in 6 steps and stay fair housing compliant

Good tenant screening is not about finding a perfect person. It is about applying fair, written standards that predict whether someone will pay rent, care for the home and follow the lease. A consistent process protects you from both bad tenancies and fair housing complaints.

Here is a six step process you can use for every application. Laws on screening vary a lot by state and city, so treat this as general information and check local rules or ask an attorney before you finalize your criteria.

Step 1: Write your screening criteria first

Before you list the unit, put your requirements in writing. Typical criteria include:

• Minimum income, often expressed as a multiple of monthly rent
• Credit standards, such as no unpaid rental debt or recent bankruptcy, rather than a score alone
• Rental history requirements, such as positive references and no unpaid balances
• Background standards that comply with local law
• Occupancy limits based on local codes
• Pet policy and any breed or size rules allowed where you operate

Publish the criteria with the listing or give them to every applicant. Then you can point to the same written standard for every decision.

Step 2: Take a complete application

Use a standard application for every adult who will live in the unit. Collect identity, current and past addresses, employment and income sources, landlord contacts, and written consent for credit and background checks.

Process applications in the order they are received complete. Many landlords use a first qualified applicant approach because it is easy to explain and defend. For what to include and what to leave out, see our rental application guide.

Step 3: Review credit

A credit report shows how the applicant handles obligations. Look for patterns, not just a number:

• Unpaid rent or collections from a previous landlord
• Recent pattern of late payments
• Bankruptcies, and when they occurred
• High debt relative to income

Medical debt and student loans often say less about rent payment than past rental debt. Some states and cities restrict credit use, especially for applicants with housing vouchers, so check before you set a credit rule.

Step 4: Verify income

Income verification answers the most important question: can the applicant afford the rent? Ask for recent pay stubs, an offer letter, bank statements, benefit letters or tax returns for self-employed applicants.

A common standard is gross monthly income of about three times the rent, though many landlords adjust this. Be careful in places with source of income protections: you may need to count voucher payments and other lawful income, and some jurisdictions require calculating the ratio only on the tenant’s share. Call employers using a number you find independently, not one written on the application.

Step 5: Check rental history

Past rental behavior is one of the best predictors of future behavior. Contact at least the current and previous landlords and ask factual questions:

1. What were the dates of tenancy and the monthly rent?
2. Was rent paid on time?
3. Did the tenant give proper notice?
4. Was any of the deposit withheld for damage?
5. Would you rent to them again?

Current landlords sometimes give a glowing reference to move a problem tenant along, so the previous landlord’s answer often matters more.

Step 6: Run a background check within the law

Background checks typically cover identity, eviction records and criminal history. This is the most regulated part of screening.

• Many states and cities limit how far back you can look, which offenses you can consider, or when in the process you can run the check.
• Blanket bans on anyone with a criminal record can create fair housing liability. Consider the nature, severity and age of an offense and its relevance to safety and property.
• Arrests that did not lead to a conviction should generally not be used.
• Some jurisdictions restrict the use of sealed or older eviction filings.

Stay consistent for fair housing

Federal fair housing law prohibits discrimination based on race, color, religion, national origin, sex, familial status and disability. Many states and cities add protections, such as source of income, sexual orientation, gender identity, age or marital status.

Consistency is your best defense. Use the same criteria, application, fees and order of review for everyone. Document each decision and keep records. Grant reasonable accommodations for applicants with disabilities, such as assistance animals, even where you have a no pets policy.

Adverse action notice basics

Under the Fair Credit Reporting Act, if you deny an applicant, require a cosigner or larger deposit, or charge higher rent based on information in a consumer report, you must send an adverse action notice. It should include:

• The name, address and phone number of the reporting agency
• A statement that the agency did not make the decision
• The applicant’s right to a free copy of the report within 60 days
• The applicant’s right to dispute inaccurate information

If a credit score was used, the notice also needs score details. Screening tools help standardize applications, consent and reports so every applicant goes through the same steps. TenantLoop already standardizes the online application, and TenantLoop tenant screening is coming soon.

Tip: Keep a simple decision log for each unit: who applied, when the application was complete, the result and the reason. It takes minutes and is invaluable if a decision is ever questioned.