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In this article, I’ll be giving real numbers for what a tenant screening should cost. Just read through half of our client survey responses and you’ll find that the cost of tenant screening is important to landlords. Unfortunately, you’ll also hear tales of the hours of research done trying to find the best tenant screening prices and match up which reports best-fit landlords needs. Thankfully we’ve been taking notes and we compiled the best quick reference guide to choosing your tenants’ background check.
How much is a tenant screening report?
The short answer for how much does a tenant screening cost is $15-$40, depending on the searches. Never pay less than $15 because it’s most likely a novelty site and not FCRA compliant. This means that as a landlord, you can’t use it. If you are paying more than $40 for a tenant background check then you better be getting every search possible, along with the screening company making phone calls on your behalf.
First, you need to decide if you want criminal and eviction data.
Most screening companies base their different tenant screening packages on these reports, and you need to decide whether or not this information is important to you.
Next, choose what type of financial data you want on your applicants.
Your choices usually include a full credit report, a decision model (pass or fail reports based on credit scores), or public records such as bankruptcies judgments and liens. Below is a helpful summary of the different choices I’ve just listed:
Full Credit Reports
Only available in 1 of 2 potential situations.
1) You’re operating out of a commercial space (not a home-based office) and you have passed a full credentialing with a site inspection.
2) You’re using our SmartMove product. The catch with this is that they rely on the applicant responding to an email and entering their personal info. For this reason, the completion rate is less than 50%.
These reports are typically branded as “credit checks” or “credit model”. They are algorithms that use credit info, such as scores, to create a pass/fail based on your limits and criteria. It is important to know that you will NOT see the raw credit details with these reports. Ever. Read the fine print as many screening companies dance around this fact.
This includes bankruptcies, judgments, and liens. It’s available to everyone without any crazy hoops or credentialing, just written consent as always. They don’t show a score but are often great indicators if you are dealing with someone that has a troublesome financial past.
Credit/financial data, Criminal data, and Eviction data
These are by far the most important report choices that will affect pricing for tenant background checks. Any other reports like OFAC, Person Search, SSN Verification, etc. are usually standards because they are cheap.
After you decide what information you want, look for the tenant screening company to bundle or package up the different reports. In most cases, this will help to stretch your dollar and give you lower prices.
Are free tenant background checks legit?
In the past few years, we’ve seen an influx of free tenant background checks. These can be misleading due to the fact that they’re not really free. They might be free to the landlord but someone has to pay for the background check.
It’s like saying dinner is free because Mom & Dad picked up the bill.
Should I care if the tenant pays for the background check?
This will depend a lot on your situation, preference, and location.
If you have a rental in a high demand location you shouldn’t have any problem having a tenant applicant pay for a $35 background check and credit report.
However, if your rental is in low demand you may weed out a couple good applicants if you’re charging upfront.
If you find you’re having trouble filling your rental you may want to consider lowering your price, improving your marketing, and also paying for the background check as the landlord.
This video below can prove helpful if you’re having trouble determining the price of your rental.