Executive Summary
The best time to evict a bad tenant is before they move in. Rigorous screening (Credit, Income, Reference) is the only way to protect your ROI. This guide provides a legal checklist to verify applicants while avoiding Fair Housing lawsuits.
The golden rule of property management is simple: An empty unit is better than a bad tenant. A vacancy costs you one month's rent. A bad tenant costs you thousands in eviction fees, property damage, and lost rent—not to mention the months of stress and sleepless nights.
The only effective way to protect your asset is rigorous, consistent screening at the very beginning. This starts with a comprehensive Rental Application. In this guide, we'll cover exactly what you need to ask, how to verify the answers, and how to stay compliant with the Fair Housing Act while doing so.
The Legal Framework: FCRA and Fair Housing
Before you ask a single question, you need to understand the rules. Screening is not just about "gut feeling"; it's a regulated process.
Fair Housing Act (FHA)
You cannot discriminate based on race, color, religion, national origin, sex, disability, or familial status. In many states (like California and New York), you also cannot discriminate based on "Source of Income" (e.g., Section 8 vouchers).
The Strategy: Treat every applicant exactly the same. Ask the same questions. require the same credit score. If you deny someone, have a documented, objective reason (e.g., "Credit score below 600," "Prior eviction on record").
Fair Credit Reporting Act (FCRA)
If you plan to run a credit check or background check, you must get written consent from the applicant. This is non-negotiable. Our Rental Application Generator includes a built-in authorization clause for exactly this purpose.
The Ultimate Screening Checklist
Your application should be designed to gather actionable data. Do not just ask for "Name" and "Phone Number." Dig deeper.
1. Identity Verification
- Full Legal Name: Check this against a photo ID (Driver's License / Passport) when you meet.
- Date of Birth: Required for accurate background checks.
- Social Security Number (SSN): Essential for credit reports. Note: Be careful storing this data. Our tool generates a PDF for you to print/save locally, keeping this sensitive info off the cloud.
2. Residential History (The Truth Teller)
Ask for at least 5 years of history. Why? Because their current landlord might lie to get rid of them. The previous landlord has no reason to lie.
Questions to ask previous landlords:
- Did they pay rent on time?
- Did they take care of the property?
- Did they give proper notice before leaving?
- Would you rent to them again? (The most telling question).
3. Employment and Income
Can they afford the unit? The industry standard is that monthly gross income should be at least 3x the monthly rent.
- Current Employer: Name, Supervisor Name, and Phone Number.
- Proof of Income: Ask for 2 recent pay stubs or 3 months of bank statements. Do not accept a screenshot of a bank balance; those are easily faked. Look for recurring deposits.
4. Background Questions (The "Yes/No" Test)
Include direct questions on the form. If they lie here, it is grounds for immediate denial (fraud).
- Have you ever been evicted?
- Have you ever declared bankruptcy?
- Have you ever been convicted of a felony? (Check local "Ban the Box" laws—some cities limit this question).
- Do you smoke?
- Do you have pets?
Red Flags to Watch For
Experienced landlords know that bad tenants often reveal themselves early.
- The "Cash Upfront" Offer: "I have poor credit, but I can pay 6 months cash upfront." This is often a trap. Once the 6 months are up, they stop paying, and you have to evict them.
- Urgency: "I need to move in tomorrow." Why? Did they just get evicted? Responsible people plan their moves.
- Gaps in Residency: "I lived with a friend for a year." This might be true, or it might mask a year where they were evicted or in prison.
- Incomplete Application: If they leave the "Previous Landlord" section blank, they are hiding something.
The Application Process
Streamline your workflow to save time and ensure consistency.
- The Pre-Screen: Before showing the unit, state your requirements in the ad (e.g., "Min Credit Score 650"). This filters out unqualified leads.
- The Showing: Meet them. Are they on time? Are they respectful?
- The Application: Hand them your professional Rental Application Form.
- The Fee: Charge a non-refundable application fee (check state limits—e.g., California caps this around $50) to cover the cost of the background check. This ensures they are serious.
- The Check: Run the credit/background check using a reputable service.
- The Decision: Approve or Deny. If denying based on credit, you must send an "Adverse Action Letter" as per FCRA.
Handling Co-Signers
Ideally, you want tenants who qualify on their own. However, for students or young professionals, a Co-Signer (Guarantor) is common. Ensure the Co-Signer fills out a separate application, undergoes the same credit check, and signs a "Guarantor Agreement." They must be fully liable for the rent if the tenant defaults.
Conclusion
Screening is the gatekeeper of your profitability. A thorough, legal, and consistent application process is your best defense against Late Fee Compliance issues and evictions down the road.
Don't scribble questions on a napkin. Present a professional image and ask the right questions with our free, compliant template.
Start screening today. Generate Your Free Rental Application.