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Yes, landlords are required to obtain consent before running a credit or background check on a tenant. Fortunately, this consent can be included in a Rental Application to streamline the process. To run a credit or background check, typically, agencies require each person's:

  • Full name.
  • Current address.
  • Social security number or individual taxpayer identification number.

Additionally, tenants may have a right to see the information you receive from a credit reporting agency or background check. If you reject an applicant based on their credit report, the Federal Fair Credit Reporting Act requires that you provide the applicant with the reason, as well as the name and address of the credit reporting agency used.

When can I start a credit and background check on a tenant?

Screening tenants is important. If your Rental Application includes a consent to check a prospective tenant's credit and background, you may do so once you receive the signed application. You may, however, want to wait until after you've reviewed the rest of the application and confirmed that the prospective tenant meets your other eligibility requirements. For example, if you require twice the monthly rent in income, and the tenant does not meet that requirement, a credit check is not likely to change the outcome. You can also consider using a Co-Signer Agreement if your tenant may not qualify without assitance. In that scenario, you want to run a similar credit check on the co-signer as well.

What am I checking for in a credit report?

In a credit report, you may learn about a prospective tenant's financial history. Once you get the credit report, look for the following issues:

  • Bankruptcy filings.
  • Felonies or misdemeanors.
  • Civil lawsuits, particularly evictions.
  • Late or delinquent payments on credit cards, loans, and other bills.

It may also be helpful to see how long the potential tenant has held a credit history. Two years or more is preferable. Looking back more than two years may also give you greater insight into the tenant's credit history and background. Note that you may not have to share all this information with the tenant. If you reject the tenant based on their credit report, remember that the Federal Fair Credit Reporting Act requires that you provide the applicant with the reason, as well as the name and address of the credit reporting agency used.

What can I do if a tenant refuses, or has a negative report?

If a tenant refuses to sign a Rental Application that allows a credit or background check, or they only refuse to allow a credit or background check, you may want to refuse to rent to that tenant. Landlords do not have to accept applicants that do not follow their application process, however, may want to make sure their process is fair and applied to all applicants equally.

If a tenant's credit or background check comes back with negative information, you may want to carefully consider the information before making a decision. Information may be incorrect, or there may be a reasonable explanation. Background checks can often reveal old criminal convictions that no longer reflect who the tenant has become as a person. Talking to the tenant about negative information contained in these reports may be enough to alleviate your concerns.

In many instances, it may violate state or federal housing laws to refuse to rent to a tenant with a criminal history. State and federal law, however, typically do not protect tenants if their conviction involved the manufacturing or distribution of drugs. If a prospective tenant has a criminal history that concerns you, you may want to talk to a lawyer before rejecting that tenant based solely on their criminal history.

Yes, it is legal to set income requirements and confirm tenants meet a certain minimum credit score. If you do, it can be a good idea to be upfront about this information in your listing and when talking with prospective tenants. Clearly communicating this information at the outset can avoid wasting both your time and the prospective tenant's.

If you have more questions about screening tenants or the Rental Application process, reach out to a Rocket Lawyer network attorney for affordable legal advice.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

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