Problem with tenant screening services

5 Major Problems With Tenant Screening Companies

When a landlord calls, we have a unique opportunity to hear about their experiences and often their problems with tenant screening services.

For the first three years in business I handled customer service calls and was able to get quite a bit of perspective from our clients and other landlords.

This inside-scoop has built our RentPrep business, by understanding what landlords are looking for and how to appeal to a broader audience.

When breaking down the 5 most common problems, it’s first important to understand that if there is one universal truth it’s this; there are different strokes for different folks.

In other words, there is not one perfect solution and opinions vary greatly from one landlord to another on what the “proper” tenant screening procedures should be.

5 Things You Should Know About Tenant Screening Services

Read before choosing your service:
1. Instant vs. Hand-Compiled Screening Services Know the difference between the two and understand what makes sense for you. Instant vs. Hand-Compiled Link
2. Credit Checks vs. Credit Reports Know why some services offer credit checks while others offer the full score. Checks vs Reports
3. Tenant Involvement Services differ with tenant involvement. Know your options. Tenant Involvement
4. Wrong Information Missing eviction data and wrong information are common issues. Screening Services
5. Tenant Services Can Be Expensive Know what you’re paying for and how not to overspend. Screening Costs

#1 Difference between instant and hand-compiled tenant screening services

In the video above I discuss the single largest problem I see in 2017 with tenant screening services.

In the rest of this post, I’ll discuss all the short-comings of tenant screening companies that I came across from taking customer service calls myself for the first 3 years of being in business.

If you’re confused on what service is best for you… I suggest reading our reviews post which breaks down 11 services and separates them into four different categories.

That tenant background check reviews post is helpful for understanding how to compare apples and oranges in the world of tenant screening.

However, in this post, we’re going to focus on the 5 most common issues we see come up with tenant screening companies.

The following list will give the problems we hear most often, and then the different perspectives to help you choose what tenant screening measures are best for your landlord style.

#2 Tenant Screening Companies Typically Use Credit Checks Instead Of Credit Scores

Quick background; in 2009 the FCRA (Fair Credit Reporting Act) decided that individual landlords were a high risk for mishandling consumers information.

This made the old way of ordering credit reports with FICO Scores nearly impossible and implemented strict requirements that now include on site inspections and rigorous credentialing.

For some landlords, this was no big deal because they don’t use credit scores as part of their decision-making criteria.

For others, it was devastating.

The problem for most tenant screening companies is that they only provide solutions for one or the other.

Either they cater to larger property management companies that can easily pass the on-site inspection and credentialing requirements, or they only offer non-credit related information like eviction history and criminal history records.

How Can I Make a Decision Without a Credit Score?

I have seen many landlords adapt well and perform thorough background checks without credit scores, but instead use credit-related information such as bankruptcies, judgments, and liens.

After all, these are all things that affect credit negatively anyway and are available through public records.

Here at RentPrep we offer a credit check which allows the landlord to select a star rating and view if their tenant passed or failed the credit check.

For those that didn’t adapt and still absolutely need credit scores, the most popular option available (if you’re not operating from a business location) is the product SmartMove by TransUnion.

SmartMove Involves the Tenant Too Much

smartmove

For some, SmartMove is great.

This is the very reason we carry the product as part of the RentPrep suite of services.

A quick explanation of the service is that it makes full credit reports along with FICO Scores available to individual landlords through a process called Consent Based Authorization.

Consent Based Authorization means that the tenant is heavily involved in the tenant screening process by receiving an email that you have requested a credit report on them.

They are then prompted to complete a series of questions authenticating their identity.

These questions typically include:

  • “Your auto loan payment is closest to what dollar amount – $200, $250 or $300?”
  • “What address does not belong in your history – 322 Main St, 436 Cash Rd, or 589 Clinton St?”

These questions are obviously relative to their credit information and can only be answered by the applicant/tenant.

The main problem with SmartMove is that it requires tenant involvement. To complete the background check the tenant applicant must do a good amount of work on their end.

#3 Tenant Involvement Varies By Service

In the case of Smartmove, the completion rate is less than 50% according to our own analytics.

This means that less than half of the people you try to screen, will not follow through and complete the questionnaire; proving that most people will take the path of least resistance and find an apartment with an easy tenant screening process.

Not to say that these are always the best tenants, but I’m sure some good ones do slip through the cracks.

When you’re selecting a screening service, keep in mind what your preference is.

Do you want to control the entire process and keep the tenant out of it?

Or are you comfortable with the tenant being involved in the process?

#4 Eviction Data Issues & Wrong Information

It’s true that judgments appear on the credit report, however, this does not always mean that an eviction will.

As landlords know, some judgments are filed as “non-monetary” for forcible entry. With evictions being the

With evictions being the single most important element of the tenant screening process, this is a huge disadvantage for SmartMove.

For me, this is the most legitimate complaint. Eviction notice letter posted on front door of house

Consider the fact that there really is no other single database record that will give you as clear insight into the renter’s history.

The number one concern every single landlords has is whether or not they will have to endure the costly eviction process.

So rightfully, this report should be an absolute must in the tenant screening process.

In my years of speaking with landlords, tenants, and seeing every background check with a “behind the scenes” perspective, I can tell you one thing with 100% certainty…

The First Eviction is the Scariest for the Tenant

But after the first one, to them it’s an experience they know they can get through and lose the fear of the unknown.

For a landlord this is devastating, because now you’re dealing with a tenant that knows the process and no longer fears the worst case scenario.

Very rarely do we see a tenant with one eviction 7 years ago.

I’m confident in saying that if they have one, more are likely to follow.

As a landlord, your job is to be sure you’re not the next eviction on their record.

The easiest way to do this, is to make sure the screening service you pick includes eviction data in their reports.

Tenant Screening Reports Have the Wrong Information

This common problem is easily explained and just as easily avoided.

tenant-screening-company-has-wrong-information

First, to identify the problem you have to understand that there are different types of tenant screening companies; some that are simply databases with an online presence, and some that are brick and mortar operations.

For the brick and mortar companies, like RentPrep, the advantage is that we’re smarter than robots.

Meaning, when you connect directly with a database through an instant background check you are retrieving information based on the information you provided.

Considering the tenant may give you the wrong SSN or you may erroneously enter the information, you now have results that do not match.

The trade-off of a small turn-around time to complete the reports is well worth the accuracy of tenant screening companies that use real people instead of robots.

And by real people I mean FCRA Certified Screeners that can not only interpret your reports to ensure compliance but find little inaccurate details like wrong or missing information.

My Rental Applicant Has a Common Name

A perfect example is my own situation.

My name, Stephen White, is so common that there are 76 people in New York State with the EXACT same spelling.

Perhaps even scarier is that there is one particular Stephen White in another state with the same exact date of birth and a criminal record!

If a landlord were to run a nationwide criminal background check on me using a robot database they would likely pull the record of the other Stephen White and assume that I have a criminal record.

Even worse, without the proper steps taken the landlord may be responsible for this mistake, not the tenant screening companies.

However, when an FCRA Certified Screener verifies the information, they will see I have no address history in the State where the felonious Stephen White resides.

Not to mention he served a life sentence for a sex crime, so how could I be walking the streets and be in prison at the same time?!

#5 Tenant Screening Companies Cost Too Much Money

For the sake of not rewriting too much content, there is an entire article written on the cost of tenant screening.

However, I will briefly summarize why the cost varies so much from one tenant screening company to another.

Don’t Be the Landlord that Paid $900

How did this happen? tenant-screening-companies-cost-too-much

The tenant screening company didn’t offer the reports in a package format and therefore the landlord had the option to run a criminal and eviction report on every single state individually.

While this seems like thorough tenant screening, what happened was they were charged for every single state as opposed to just opting for the nationwide search and saved about $890.

For this reason RentPrep only offers national level searches and has a no-hidden-fee policy.

You get what you pay for and only pay when you order.

How Much Do Tenant Screening Reports Cost?

Some tenant screening companies that charge monthly minimums or annual fees are charging whether you need reports or not.

And in speaking to landlords every single day, very few need to run a consistent volume of reports to warrant the minimums.

Most landlords have a few units and need tenant screening a dozen times a year, but never spread out evenly from one month to the next.

It’s usually 2 reports one month, zero the next month, 4 reports the following month, etc.

So be sure you’re not signing yourself up to something that locks you in, or charges for things you don’t need or aren’t even getting.

Look for pay as you go and no annual/monthly fees.

Aside from these common problems landlords have with tenant screening companies, the easiest way to find the best fit for you is to make a few calls.

See what kind of support the tenant screening company has and ask about their services and products.

We already wrote an article on how to choose the best tenant screening company, and it will give you a perfect guide if you’re looking to find the best fit for your particular needs.

How to save money on tenant screening

Remember, when it comes to tenant screening, one size does not fit all but we’d be happy if you gave RentPrep a try.

As added incentive we offer the promo code “TWENTYOFF” to receive 20% off on your first tenant screening report.

Just sign up for your free account by clicking here.

Then use the promo code (on the last checkout page inside our client area) to save 20% on your entire first order.

About the author

I started RentPrep in 2007 and our mission is to pull the stress out of being a landlord.

We do this by helping you find the best tenant and providing educational resources along the way.

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