How to Do a Background Check on a Tenant: A Step-by-Step Guide

Renting out your property is more than a financial decision—it’s a partnership with your tenant. Choosing the wrong renter can lead to missed payments, property damage, or legal headaches. That’s why a thorough background check isn’t just a formality; it’s your first line of defense in protecting your investment and maintaining peace of mind.

Background checks go beyond verifying an applicant’s information—they uncover potential red flags that could save you from costly mistakes. By investing time in this step, you ensure your tenants are reliable, responsible, and a good fit for your property.

In this guide, we’ll walk you through the importance of tenant background checks, key details to watch for, a step-by-step process to follow, and the legal guidelines to keep in mind

Let’s get started!

What to look for in a tenant background check

A lot of information can come up when running a background check on a prospective tenant. As a property owner, there are a few categories you should pay close attention to, such as an applicant’s criminal history, credit history, employment history, and rental history. 

Criminal history

Screening for criminal history is an important step in assessing potential tenants. Convictions or recent arrests can indicate risks, such as poor judgment or behavior that might lead to disputes. However, it’s important to evaluate these factors fairly, considering both the severity and recency of any offenses.

Keep in mind that tenant screening laws vary by state. For example, Washington State’s Fair Chance Housing Act prohibits landlords from denying housing based solely on arrests or certain older convictions. To remain compliant, landlords should focus on convictions relevant to tenancy and avoid blanket rejections based on minor or outdated infractions.

By exercising good judgment and adhering to local regulations, you can make informed decisions while maintaining fairness and compliance.

Credit history

Once you’ve verified that a prospective tenant is not a danger to you, your rental property, or their future neighbors, you should assess their credit history. Credit reports reveal the likelihood of tenants paying their rent on time.

Negative marks such as bankruptcies, collections, late payments, liens, or unpaid debts signal an inability to keep up with financial obligations. Considering that rent is often one of the biggest financial obligations a tenant has, it’s best to rent to a tenant with no or minimal negative marks on their report. 

Some tenants may be hesitant to let you run a credit check on them because they fear a hard inquiry on their report. Reassure them that when a credit check is conducted as a part of a background check, it registers as a soft inquiry.

Once you’ve obtained their consent, you can run a credit check on them through one of the three major credit bureaus (Equifax, Experian, or TransUnion), or a property management software, such as Azibo. 

Employment history

Another important factor to take into account when evaluating a tenant’s background check report is their employment history. Gaps in employment may suggest a tenant is unable to hold down a job or otherwise produce a stable income.

If you suspect an applicant has been dishonest about the length of their employment at a particular company or has fabricated a position altogether, you may want to contact their previous employers.

Background checks reveal, at minimum, the company's contact info, such as their physical address, email address, and phone number. If this basic contact information doesn't come up, the company a tenant claims to have worked for may not exist.

Rental history

Lastly, property owners need to verify a tenant’s rental history. Keep an eye out for past evictions, broken leases, or property management complaints. Lack of any rental history may be an issue for some property owners; however, it shouldn’t be an instant disqualifier.

New renters can be good tenants as long as they possess other qualifications, such as a clean criminal record, a high credit score, and stable employment.

How to run a background check on a tenant- Step by step

After you’ve established criteria for screening prospective tenants, it’s important to understand how to conduct the process effectively. Here is a step-by-step guide to performing a legal and thorough background check:

Get signed consent and gather tenant information

Before conducting any background or credit check, it’s essential to obtain written consent from the tenant. This is a legal requirement, and using a service like Azibo’s free online rental application simplifies the process by including a built-in section for tenants to provide explicit consent, ensuring compliance and streamlining your workflow.

Once consent is secured, gather the necessary information to conduct a thorough background check. This includes:

• Legal name, date of birth, and social security number

• A copy of the tenant’s driver’s license or identification card

• Vehicle information (if applicable)

• Previous addresses, landlord references, and employer references

Cross-referencing this information with screening reports helps verify accuracy and identify potential red flags, enabling you to make informed decisions with confidence.

Choose an approved background check service

With the necessary documentation in hand, you can move forward and select a background check service company to run your reports. There are several background check services to choose from -- just make sure that the company you choose is approved by the Federal Trade Commission. Only FTC-approved companies should have access to this type of sensitive tenant information.

Tenant screening reports cost between $25 to $75 per applicant. Keep these prices in mind when selecting a background check service company, and only purchase reports for applicants you're serious about, as these costs can quickly add up.

Run a criminal background check

Criminal background checks involve the federal, state, and county offices. Federal inquiries go through the FBI, while states and counties usually make criminal activity, such as warrants, arrests, and convictions, publicly available on their websites. Criminal background checks usually include the following information about a tenant:

• Aliases.
• Arrests.
• Convictions.
• Time served in jail.
• Time served in prison.
• Terrorist activity (FBI).
• Sex offender status.
• Pending criminal charges against the applicant.
• Description of the applicant’s physical appearance.

Request a credit report

Property owners can run a credit check on prospective tenants by establishing a tenant screening account with one of the major credit reporting bureaus (Equifax, Experian, or Transunion). Each bureau acts according to the Fair Credit Reporting Act and provides property owners with a certain amount of credit checks per month. Signing into your account and requesting a credit report on a tenant should only take a few minutes.

A credit report will reveal whether an applicant has become delinquent on any of their accounts, as well as any derogatory marks they’ve accumulated over the years. Recent evictions, foreclosures, and bankruptcies will be visible on their report. Credit checks also reveal if a tenant's utility bills or unpaid rent have ever entered collections.

Check previous rental history

Depending on the background check service company you choose, you’ll be able to pull previous addresses, evictions, and landlord disputes. If rental history information is incomplete or vague, you can always call the tenant’s previous landlords to discuss their experiences with your applicant.

This is why it's important to request previous landlord information during the rental application process. However, if there’s no reason to suspect poor tenant behavior, you don’t have to investigate further. 

Simplify tenant screening with Azibo

Azibo is an all-in-one platform designed to make tenant screening seamless for landlords and property managers. By partnering with TransUnion, Azibo provides robust screening tools, including credit checks, criminal history, and eviction reports—all tailored to help you find reliable tenants while staying compliant.

With Azibo, you can:

• Easily collect rental applications online.

• Access detailed tenant screening reports, including financial and rental histories.

• Provide a user-friendly, modern application process for prospective tenants.

Best of all, Azibo’s screening services are free for landlords, making it a cost-effective way to protect your investment and streamline your workflow.

Start using Azibo today to simplify your tenant selection process and make confident leasing decisions.

Legal considerations to running background checks on tenants

Whether you’re going through a third party or running tenant background checks yourself, rental applicants are protected by tenant rights at the federal and local levels. Here’s what you should keep in mind:

Federal laws

Background checks often reveal more information than needed to evaluate whether or not a rental applicant would make a good tenant. It’s important not to misuse this information to discriminate against a certain group of people.

The Fair Housing Act prohibits property owners from denying housing to someone based on their race, color, religion, gender, sexual orientation, familial status, or national origin. Make sure that throughout the rental application process, you are not assessing tenants based on any of their protected classes.

State laws

The Fair Housing Act applies to all rental applications across the country. However, state laws differ in terms of how property owners can execute tenant screening reports. Depending on the state your property is located in, you may be limited in terms of how far back you can go in your background checks, as well as what information you have access to.

Make sure you are familiar with local laws governing the tenant screening process in your state before conducting background checks on your tenants. 

When you should turn a tenant away based on a background check

Finding the perfect tenant for each unit can be challenging, and you may need to compromise on some rental criteria to avoid vacancies. For example, you might decide to rent to someone with no rental history but a strong credit score or an applicant with a non-violent criminal history from many years ago.

However, there are instances where it’s best not to take the risk. Applicants who are registered sex offenders or have a violent criminal history could pose a serious threat to your property and the safety of other tenants. Similarly, tenants with a history of criminal activity at previous rental properties or those involved in repeated unlawful behavior might not be suitable for your property.

When making these decisions, it’s essential to comply with the Fair Credit Reporting Act (FCRA) if the denial is based on information from a background check. In such cases, landlords are required to issue an Adverse Action Notice (AAN) to the applicant. This notice must explain:

• The decision to deny their application.

• The reasons for the decision, referencing the information used.

• Their rights under the FCRA, including the ability to dispute inaccuracies or request a free copy of the report from the screening provider.

Ultimately, balancing your interests as a property owner with the safety of your existing tenants is key. Ensuring compliance with FCRA regulations and issuing AANs when appropriate fosters transparency and protects all parties involved.

Processing a rental application with background check with confidence

Conducting thorough background checks is an essential step in selecting reliable tenants and protecting your property investment. By following a structured process, you can ensure that your tenants are financially stable, have a positive rental history, and meet your established criteria, all while adhering to legal requirements such as the Fair Credit Reporting Act (FCRA).

Using tools like Azibo’s free rental application and tenant screening services simplifies this process, helping you securely collect the information you need, access comprehensive reports, and make confident, informed decisions. With features such as built-in consent forms, quick screenings, and seamless communication tools, Azibo ensures you remain compliant while streamlining your workflow.

Tenant screening is not just about avoiding risks—it’s about building a strong foundation for a positive landlord-tenant relationship. By investing time and effort into this critical step, you create a safer, more harmonious living environment for everyone involved. Start your screening process today and make every rental decision with confidence.