Ever come across the term “tenant screening”? It’s more important now than ever.
A survey by the National Multifamily Housing Council (NMHC) found that over 70% of rental housing providers experienced an increase in fraudulent applications and payments in just the past year. Other industry reports echo the trend, with nearly 4 out of 5 landlords noticing more fraud and misrepresentation on tenant applications.
Let me share Mike’s story. He owned a duplex in Phoenix and had a unit sitting empty, bleeding $1,400 a month. When an applicant came along, he seemed friendly, had a reasonable excuse for his bad credit, and Mike was eager to stop the losses.
Instead of running a full tenant screening, he rushed the process. Six months later, that decision came back to bite him. A whopping $8,500 in unpaid rent, $3,200 in damage, and another $3,500 in eviction costs.
All told, that “nice guy” ended up costing Mike more than $15,000, simply because he skipped proper screening.
Thousands of landlords are learning expensive lessons about why tenant screening isn't optional, it's survival. I can tell you that tenant screening is the single most important thing you can do to protect your investment.
What Is Tenant Screening?
Tenant screening is just a way of making sure the person moving into your place is trustworthy. So before you hand over the keys, you want to know if they’ve paid rent on time in the past, if they’ve had any evictions, or if there are red flags in their background.
The easiest way to think about it? Hiring.
You wouldn’t bring someone onto your team without checking references, and renting works the same way. The only difference is this “new hire” isn’t working at a desk, they’re living inside a property you’ve invested thousands (maybe hundreds of thousands) into.
A good screening usually covers credit history, criminal record, past evictions, job and income verification, and a quick check with previous landlords. Each piece gives you another clue about what kind of tenant you’re about to accept, or what kind of headaches you might be inviting in.
See a visual breakdown of tenant screening components with percentage of landlords who check each item:
Why Tenant Screening Is Actually Wealth Protection
Here's the brutal truth: one bad tenant costs more than five good ones. The average eviction costs $3,500, but that's just the legal fees. Add in lost rent, property damage, and turnover costs, and you're looking at eviction costs ranging from $500 to $10,000 depending on your location and situation.
Let's do the math on what a bad tenant actually costs. Say you charge $1,500 per month in rent. A problem tenant stops paying after three months. You spend two months trying to work it out before filing for eviction. The eviction process takes another two months. That's seven months of lost rent — $10,500 — plus the $3,500 average eviction cost, plus property damage repairs that average $2,000-5,000. You're looking at $16,000-19,000 in losses from one bad tenant.
Now consider that proper tenant screening costs $40-65 per applicant. You can screen nearly 100 tenants for the same price as evicting one. That's not just good business, that's basic financial survival.
The Tenant Screening Checklist That Actually Works
Effective tenant screening isn't complicated, but it has to be thorough and consistent.
Here's what actually works based on years of real-world experience:
Credit Score Above 650
A credit score tells you how someone handles financial obligations. A score above 650 isn't perfect, but it shows basic financial responsibility. Below 600 is a red flag that this person struggles to pay bills on time.
Some people will tell you credit scores don't matter, but the data disagrees. However, HUD has acknowledged being "unaware of any studies showing that credit reports and scores accurately predict a successful tenancy" and advised landlords to consider racial and other disparities in credit scoring.
The key is using credit scores as one factor, not the only factor. Someone with a 620 score who can explain a medical bankruptcy is different from someone with a 620 score who has multiple unpaid debts and no explanation.
Income 3x Monthly Rent
The income-to-rent ratio is simple math. If rent is $1,200 per month, the tenant needs to make at least $3,600 per month gross income. This ensures they can afford rent while covering other living expenses.
Some landlords use a 2.5x ratio, but that's cutting it close in today's economy. With the median outstanding rental balance rising 60% between September 2021 and November 2024, tenants are struggling more than ever to keep up with rent payments. The 3x rule provides a buffer for unexpected expenses.
Below is a comparison chart illustrating how tenant on-time payment rates improve as income-to-rent ratios increase.
No Evictions in 5 Years
Past evictions are the biggest red flag in tenant screening. If someone's been evicted before, the chances of them getting evicted again are significantly higher than someone with clean rental history.
The eviction rate in 2022 was 14%, down from 30% in 2019, but that's still a substantial number of renters who couldn't meet their lease obligations. Checking eviction history is non-negotiable.
Some landlords will accept tenants with old evictions if there's a compelling explanation and strong evidence of changed circumstances. But requiring no evictions in the past five years is a reasonable standard that protects your property.
Employment Verification
Income claims on applications mean nothing without verification. Contact the employer directly to confirm the applicant works there, how long they've been employed, and what their salary is. Pay stubs can be faked but a phone call to HR can't.
Look for employment stability. Someone who's changed jobs five times in two years might have income today, but will they have it six months from now? Job stability indicates financial stability.
Previous Landlord References
This is where you find out what applicants won't tell you themselves. Previous landlords will tell you if the tenant paid rent on time, took care of the property, caused problems with neighbors, or left the place trashed.
A trick I often use is not just calling the most recent landlord. Call the one before that too. The current landlord might give a glowing reference just to get rid of a problem tenant. The previous landlord has no reason to lie.
Background Check Completion
Criminal background checks protect you and your other tenants. You're not necessarily looking for someone with a perfectly clean record. Nobody’s perfect, especially about financial matters. You're looking for red flags like violent crimes, property crimes, or patterns of illegal behavior.
Different states have different rules about what you can and can't consider in background checks, so make sure you're following local fair housing laws. But within legal limits, knowing who you're letting into your property is essential.
See below a visual of the correlation between screening thoroughness and tenant problems over 12 months:
What Bad Tenants Actually Cost You
Bad tenants don't just stop paying rent. They create cascading problems that eat into your profits and destroy your peace of mind.
Property Damage
The security deposit covers normal wear and tear, not the kind of damage bad tenants cause. Holes in walls, destroyed carpets, broken appliances, pest infestations — these repairs can easily exceed your one-month security deposit.
Property damage from bad tenants often runs $3,000-7,000 beyond what the security deposit covers. That money comes straight out of your pocket while the unit sits vacant getting repaired.
Lost Rent and Vacancy
Every day a unit sits empty is lost money you'll never recover. The eviction process alone can take 2-4 months depending on your state, and that's before you factor in repair time and finding a new tenant.
At $1,302 per month (the national average rent), a three-month vacancy during eviction and turnover costs $3,906 in lost rent. Add another month for repairs and finding a new tenant, and you're at $5,208 in lost income.
Neighbor Problems and NOI Destruction
Bad tenants don't just affect one unit, they affect your entire property's value. Noise complaints, illegal activities, property damage visible from the street. All of these things drive good tenants away and make it harder to maintain high occupancy rates.
Your Net Operating Income (NOI) depends on keeping good tenants long-term and minimizing turnover. One bad tenant can trigger a domino effect where good tenants leave because they don't want to deal with the problems, leading to higher vacancy rates and lower property values.
The Cost of Tenant Screening vs. The Cost of Not Screening
Tenant screening costs between $40-65 per applicant depending on how comprehensive the screening is and where you're located. California landlords can charge up to $65.37 per applicant for screening fees as of 2024, adjusted annually with the Consumer Price Index.
Compare that to the minimum $3,500 cost of eviction, and screening looks like the bargain of the century. But the real comparison is even more dramatic when you factor in all the hidden costs of bad tenants.
A comprehensive tenant screening that costs $50 can prevent losses of $15,000-20,000 from one bad tenant. That's a 300-400x return on investment just from avoiding one disaster scenario.
When High Standards Create High Returns
Some landlords worry that strict tenant screening standards will leave their units vacant longer. The math doesn't support this fear.
An extra week or two finding the right tenant costs you maybe $400-600 in lost rent. A bad tenant costs you $15,000+. You can afford to be patient and selective when the alternative is that expensive.
Properties with strict tenant screening standards typically have:
- Lower turnover rates (good tenants stay longer)
- Fewer maintenance issues (responsible tenants take care of the property)
- Higher on-time payment rates (qualified tenants can afford the rent)
- Better neighbor relations (fewer complaints and problems)
All of these factors increase your NOI and property value over time. High standards aren't just about avoiding disasters — they're about building a sustainable, profitable rental business.
The Legal Side of Tenant Screening
Tenant screening has to comply with fair housing laws, which prohibit discrimination based on race, color, national origin, religion, sex, familial status, or disability. Your screening criteria must be applied consistently to all applicants.
This means you can't have different credit score requirements for different applicants, you can't waive employment verification for some people but not others, and you can't make exceptions to your screening standards based on how much you like someone.
Document everything. Keep records of all applications, screening reports, and reasons for approval or denial. If you're ever accused of discrimination, consistent documentation of your screening process is your best defense.
The Bottom Line on Tenant Screening
Tenant screening isn't optional if you want to build wealth through rental property. It's the foundation of everything else you do as a landlord.
Is thorough screening strict? Yes. Does it eliminate some potential tenants? Absolutely. But the tenants it eliminates are the ones who would have cost you thousands of dollars in problems, damages, and legal fees.
One bad tenant can wipe out years of profit from good tenants. The screening process is your defense against that nightmare scenario. Spend the $50-65 per applicant, check everything, and don't make exceptions because you feel pressure to fill the vacancy.
Low standards create expensive lessons. High standards create high returns. Choose wisely.