Tenant Screening 101- How To Choose The Right Renter Legally And Fairly

Want to ensure you find a reliable tenant without violating laws or opening yourself up to accusations of unfair treatment?

This guide will walk you through a complete process for tenant screening, with all the legal considerations, best practices, practical steps, and real-world details you need. Use this to screen renters consistently, fairly, and in full compliance with the rules.

The Legal Foundation You Can’t Ignore

When you are selecting a tenant, it’s not just about finding someone who will pay rent—it’s also about following the law. These are key legal frameworks:

• Fair Housing laws prevent discrimination. You cannot base your decisions on an applicant’s race, colour, religion, sex, national origin, family status (e.g., children), or disability.
• Consumer reporting laws apply if you pull credit or background checks (consumer reports). If a report influences your decision, you must give proper notice.
• State & local laws add further requirements. Screening rules vary by city and state: what you can ask, what you can charge, how you treat criminal history, application fees, etc.

In short: You must be consistent, use the same criteria for all applicants, and apply them fairly.

Build Your Screening Workflow (Step by Step)

Below is a recommended workflow for screening tenants legally and effectively:

1. Create written rental criteriabefore soliciting applications. This ensures clarity and fairness.
   • Example: Minimum income = 3 times the monthly rent; no major lease violations in last 2 years; credit delinquencies under a certain threshold; criminal conviction review case-by-case.
2. Use the same application form for every applicant.
   • Include name, current address, employment/income, previous tenancy history, consent to background/credit check.
   • Avoid questions about protected characteristics (race, religion, disability, etc.).
3. Receive written consent to pull credit or background reports (if you do so).
4. Verify income and employment.
   • Check recent pay stubs, job offer letters, bank statements, or benefits statements.
   • Compare income to rent: many landlords use a 2.5×-3× monthly rent benchmark.
5. Check credit and payment history.
   • Look for housing/lease-related delinquencies, evictions, judgments—not just the credit score.
   • Use consistent standard across applicants.
6. Contact prior landlords for references.
   • Ask: Did the tenant pay on time? Did they adhere to lease terms? Damage the property? Renew if eligible?
7. Review criminal history and public records carefully.
   • Avoid blanket bans (e.g., “no one with any conviction”) because that may have unfair impact.
   • Focus on nature of conviction, relevance to tenancy (property damage, violence), and how long ago it was.
8. Make decision and document it.
   • If you deny or conditionally approve (e.g., with a co-signer or higher deposit), you might need to issue an adverse action notice (if you used a consumer report).
   • Keep records: the application, screening decision, criteria applied, and any notices given.

Key Numbers, Facts to Know

Here’s a table summarising major screening criteria and how you might use them:

Screening Factor	Typical Benchmark / Rule	Why It Matters
Income to Rent Ratio	Often 2.5× to 3× monthly rent	Ensures tenant has sufficient income to cover rent + other expenses
Credit / History	No recent housing judgments or major delinquencies; consistent payments	Reflects ability and willingness to meet contractual obligations
Rental History	On-time payments, clean property, no recent evictions	Prior behaviour is often best predictor of future behaviour
Criminal / Public Records	Review relevant convictions; avoid blanket bans	Ensures safety and reduces liability while being fair and compliant
Application Fees	Varies by state – some limit fees, some tie to actual cost	Charging too much or not disclosing fees can be a legal risk

Additional facts:

• Using consumer reports (credit/background) triggers legal obligations if you deny or condition based on the report.
• Some jurisdictions cap application or screening fees, or require disclosure of how much is being paid for screening services.
• If you deny an applicant because of something in their screening report, you must provide name/address/phone of the screening company and an opportunity for the applicant to dispute.
• Screening criteria must be applied uniformly to all applicants to avoid differential treatment that may amount to discrimination.

What You Can and Cannot Do

Do

• Publish your criteria in advance (rent amount, income requirement, etc.).
• Use the same questions and application for all applicants.
• Verify income/employment.
• Pull consumer reports with permission.
• Document your decision and keep records.
• Ensure data/privacy of applications and screening info.

Don’t Do

• Ask questions about race, religion, national origin, disability, family status, sexual orientation.
• Make decisions based solely on “arrest” records rather than convictions (in many areas this is illegal or risky).
• Use arbitrary criteria that weren’t published in advance (e.g., “I don’t like people who have pets”).
• Charge hidden or undisclosed fees for application or screening.
• Apply different standards to different applicants (e.g., stricter for one person than another).

Fee & Application Cost Considerations

When you collect application fees for screening:

• Many jurisdictions require that the fee reflect the actual cost of screening (credit/background checks) and not be a profit centre.
• Some states set maximum amounts or limit what you can charge.
• If you withdraw the unit from market after collecting a fee, you may have to refund the applicant (depending on local law).
• Always provide an itemised receipt or at least clarify what the fee covers (application processing, credit check, background check).
• If you use multiple screening vendors or outsource, ensure fees charged comply with local limits.

Crafting Fair & Effective Criteria

When you write your criteria, keep them: objective, relevant, and measurable. For example:

• Minimum monthly income: 3× rent.
• No unpaid judgments for housing rental or lease violations in the past X years.
• No evictions in the last 2 years.
• Credit history: no more than one late payment exceeding 60 days in the past 12 months.
• Criminal convictions: review any within past 7 years that involve property damage, violence, sexual offences; older or unrelated convictions may warrant case-by-case review rather than automatic denial.
• Pets: if you allow pets, require proof of pet deposit and verify breed/size restrictions the same for all applicants.

By being consistent and transparent, you reduce risk of unfair treatment claims and build confidence in your process.

Handling Denials and Conditional Approvals

If you decide to deny an application or approve conditionally (co-signer required, higher deposit, shorter lease), do the following:

• Issue an adverse action notice if a consumer report influenced your decision. The notice should include: the name, address and phone number of the screening company; a statement of the applicant’s right to obtain a free copy of the report; and a statement of the applicant’s right to dispute inaccuracies.
• Keep documentation of your decision, the criteria applied, and any dialogue with the applicant.
• Provide any required disclosures as per local law (some jurisdictions mandate that you give applicants a copy of the screening report or their rights).
• If you condition the approval (e.g., co-signer), apply that condition uniformly to any applicant meeting that scenario—not selectively.

Why Consistent Screening Matters—Risk Mitigation

• Screening helps you avoid rent default, property damage, lease violation, and eviction cost. An unchecked applicant may turn into a costly problem.
• If you apply inconsistent criteria, you increase the risk of a fair-housing complaint or discrimination claim. Even unintentional bias can lead to liability.
• Keeping good records—not just decisions but the process—serves as your evidence you treated all applicants fairly and followed your published criteria.
• Being compliant with consumer reporting laws avoids fines and legal exposure (if you misuse reports or fail to provide required notices).

Recap of Top Steps to Get Right

1. Publish your screening criteria before advertising your unit.
2. Use a uniform application form and request the same info from each applicant.
3. Obtain consent for credit/background screening if you use those reports.
4. Verify income/employment and rental history.
5. Review credit and criminal records in a targeted, relevant way—not blanket bans.
6. Make the decision, document it, and notify the applicant properly if you deny or impose conditions.
7. Keep your records safe and consistent.
8. Review your state/local laws regularly for changes in screening or fee rules.

Screening tenants is a critical part of managing rental property—but it must be done legally and fairly.

By publishing clear criteria, applying them equally, verifying income/rental history, cautiously reviewing credit and criminal records, and following consumer-reporting laws, you protect your investment and reduce risk of legal problems.

Treat each applicant with a consistent process, document your workflow, and keep up with local legal developments.

Do it right, and you’ll increase your odds of finding a quality renter who pays on time, follows lease rules, and stays long-term—while staying fully compliant with the law.

FAQs