Conducting Background Checks on Potential Housemates

Inviting someone to share a home with you will always involve risks, but there are things you can do to manage that risk. You can read about some of them in other blog posts, including Recognizing and Avoiding Housing Fraud, Spotting Housing Fraud: A Real-Life Example as well as 10 Steps to a Successful Homeshare.  An additional way to manage the risk is through conducting background checks.

Different types of background checks include credit reports, calling references, and looking into criminal histories. Both seekers and providers can run checks on potential housemates, many of which can be done for free. This post will help you determine which background checks you will perform so that you can feel comfortable choosing a housemate.

One type of background check that can help both seekers and providers determine if a homeshare will be successful is financial screenings. It is more common for home providers to require this verification to ensure a seeker has the capacity to pay for rent each month, but seekers may also want verification of the provider’s financial security. Sharers can find out about the other person’s financial status in a number of ways, one of which is to ask them to provide documentation. Some documents seekers and providers can legally ask each other for are:

• Verification of employment

• Tax returns

• Social Security benefits

• Recent pay stubs

• W2s or 1099s

• Bank statements

• Disability income

Homeowners are allowed to (and should) set their own requirements that potential renters must financially meet, and these requirements should apply consistently to all applicants. It is important to have your requirements consistent between applicants in order to be in compliance with fair housing laws and avoid discrimination. Requirements may vary depending on your needs and desires, but a common income requirement is proof that the renter makes 2-3 times the cost of rent each month. If a renter does not meet all of the requirements but the home provider still wishes to rent to them, the renter can appoint a cosigner that can provide proof of income instead. For more information on proof of income, read this article from Apartments.com.

Do make sure that any records you are given are recent ones--within the last 2-3 months.

Another way to ensure a potential housemate’s financial status is by running a credit check or obtaining their credit score. Like most financial screenings, it is more common for the home provider to run these checks on potential renters to ensure they can pay rent each month, but seekers may also run these checks on the provider if desired.

Credit Reports vs Credit Scores:

Running a credit check provides you with a credit report. A credit report reveals personal financial information such as bill payment history, loans, debt, and bankruptcy and lawsuit history. In most cases these reports will not include a credit score. A credit score is a 3-digit number that is used to evaluate the likelihood of someone repaying borrowed money. The higher a person's score is, the more likely they are to be financially responsible and pay back loans on time. Any score above 670 is generally considered a "good" credit score by most lenders.

Self Reporting

One way for seekers and providers to exchange credit information is by collecting the information themselves and sharing their data with the other party. This is usually a simple and fast method of reporting. However, there is some risk involved in this approach. Someone could provided outdated information or create a fake credit report or score that looks real, or one that is so confusing you could miss important details. Make sure any reports the other party gives to you are from the last 2-3 months. Some approaches to self report credit data include:

• Credit Reporting Agencies: By law, you can get a free report of your own credit each year from credit reporting agencies (CRAs). Seekers and providers can run these checks on themselves and provide a copy of their credit report to the other person.

• Through your credit card issuer: Many banks and credit card companies now provide free access to your credit score through their website or app. This information can be accessed by logging into your online account. You could print it out and give it to your prospective housemate, or provide them with a digital copy.

• Non-profit credit counselors: Credit counseling organizations can help you retrieve your credit report and score for free, and well as help you understand the details of each and how to improve them. The U.S. Department of Justice has a list of approved credit counselors, which you can access here.

• Buying your credit score: There are a few major credit reporting agencies including Equifax, Experian, and TransUnion that will provide you with your credit score for a fee. These companies often offer credit monitoring, identity protection, and other services for a monthly fee.

Screening the Other Party

The other way to review the credit data of another person is to run a check on them yourself. If you are running a credit check on someone else, you must obtain the written consent of the other person before running the checks, according to the Fair Credit Reporting Act (FCRA).

• Running a credit report on someone else: If you have obtained the written consent of another person, you can get a report of their credit, usually for a fee. To do this you will need their social security number (SSN) or Individual Taxpayer Identification Number (ITIN), date of birth, and a signed authorization form for a credit check. This information can be used to order a credit report from a handful of companies to reveal credit-related data and financial responsibility. The seeker or provider can require a fee from the other party if they plan on running a credit check on them that will cost money.

There are a variety of government-authorized websites, such as AnnualCreditReport.com, Equifax, TransUnion, and Experian, that produce credit reports and credit scores. These different options and websites may have varying costs involved, so assessing these prices is an important step. For more information visit https://www.usa.gov/credit-reports.

Another type of background check that we highly recommend both seekers and providers do, is calling the personal references of the other party. The seeker and the provider should both provide 2-3 personal references that the other party can call and ask questions to assess homesharing compatibility. These references should be people who know the seeker or provider well, but are not related to them. Examples of good personal references would be neighbors, coworkers, and long-time acquaintances. When calling a personal reference, use our provided list of example questions to find out important information.

If you have followed our 10 Steps to a Successful Homeshare, you may already have this information about the other person. However, it is always a good idea to double check these facts with someone besides the potential homesharer.

An important type of background check is looking into the other person’s rental history. This step is typically more important for the home providers to check on home seekers, but in certain circumstances seekers may want to do this step as well. The seeker or provider can ask the other party to provide the contact information of their previous landlord(s) or renter(s). We recommend that providers contact at least two previous landlords where possible. Some questions to ask of a previous landlord include:

• Payment history: “Did they consistently pay their rent on time?”

• Property condition: “Was there any damage to the unit beyond normal wear and tear?”

• Lease adherence: “Did they adhere to the terms of the lease? Did they give proper notice before moving out?”

• Complaints or issues: “Were there noise complaints or other issues caused by this tenant?”

• Unauthorized pets or occupants: “Did this tenant ever have any unauthorized pets or occupants staying with them?”

• Security depository: “Was their security deposit returned in full? If not, why?”

• Character: “How would you describe this tenant? Would you rent to them again?”

Some questions to ask of previous renters include:

• Cleanliness expectations: “What were the expectations with regards to cleanliness?”

• Monetary expectations: “How were bills and shared costs handled?”

• Social habits: “How frequent and pleasant were interactions with this person? What rules surround guests?”

• Noise and sleep schedules: “How would you describe the noise levels in this home? What were their sleeping and schedule habits like?”

• Communication styles: “How would you communicate with each other?”

• Conflict resolution: “Did issues ever arise between you and the home provider? If so, how did you resolve them?”

Another way to look into someone’s rental history is by seeing if they have any previous evictions. The way to do this differs state to state, but you can try accessing public records or requesting information from county or state courts.

Another way to screen a potential housemate is by running a criminal background check. Both seekers and providers may be interested in conducting this step on the other party to ensure a safe and secure living environment. Some approaches to complete these checks include:

• General criminal history: Local & State Background checks will give an overview of a person’s criminal history.

• Sex offender registry: Megan's Law checks. This law requires that information related to registered sex offenders be public.

• Online services: Reliable Background Screening is a service that completes background checks. It is an all-inclusive service that provides local, national, DMV, and social media searches. This service starts at $50 and increases in price for more in-depth searches.

An important aspect to consider when running criminal background checks on potential housemates are the laws and regulations that discourage discrimination. These laws differ state to state, so it is important to check the local, state, and federal laws that apply to your area. Like credit report checks, each party must acquire the written consent of the other person before running a criminal background check. In California, landlords generally cannot discriminate on convictions older than seven years or criminal arrests that did not include convictions. However, these laws may apply differently when applied to homesharing.

Finally, a simple yet effective way to learn more about a potential housemate is to look them up online. A quick search on Google or your browser of choice can reveal quite a bit of information about a person. In the search bar you can enter their name in quotations (e.g. “Jane Doe”) and other identifying information such as the city they live in or place of employment. You can also try to find them on social media platforms such as Facebook , Instagram, or LinkedIn. If they have a private account you can try to request them, but should also be understanding if they are hesitant to accept the follow request of a person they may not yet know.

Additional Tips

The background check process can be time consuming and expensive. It is important to begin conducting these checks at the right point in the homesharing process to ensure the safety of both parties, but not waste either’s resources. From our experience with homesharing we have found that the appropriate point to conduct these checks is after both parties have gotten to know each other and feel they may make good housemates, but before the seeker is invited into the home of the provider. This is a good way to ensure the checks aren’t run too early in the process, and there is less of a risk of wasting time and money to only find out later the seeker and provider would not be a good match personality wise. It also ensures the checks aren’t run too late in the process, avoiding the possibility that the seeker or provider enters into an unsafe situation. There is no specific rule about when to run background checks, but you should balance the time and money these checks require with the probability of the homeshare working out. To learn more about the recommended home sharing steps read this blog post.

There is not one right way to conduct background checks. Every seeker and provider will have a different level of caution when moving through this process. Depending on the concerns of each party, some may be more rigorous during the screening process than others. However, we do recommend a more cautious approach when conducting these searches in order to ensure as much safety and security as possible.

For both seekers and providers it is important to ensure federal, state and local laws are being followed when conducting background checks. For credit and criminal background checks, the written consent of the other party must be acquired before running them. For providers, it is important to apply requirements to all potential renters equally in order to avoid discrimination and to be in accordance with fair housing laws. There are also rules about what landlords can and cannot discriminate against when considering a potential tenant, but these laws do apply differently to homesharing. For more information on California tenant screening laws, visit this website.

Unfortunately, there are unsecured websites that claim to run background checks, but are unsafe for use. These websites may charge excessive fees or steal your personal information. It is important to make sure you are using reliable online services, especially when inputting sensitive information. You should also proceed with caution when reviewing the personal documents provided by the other party. Pay close attention to proof of income and identification documents to ensure they have not been altered or forged. It is also important to double check the validity of these documents by calling personal and professional references. To learn more about recognizing and avoiding housing fraud read this blog post.

If you are listing your space online or using online services to search for a space to rent, there may be simple and effective ways to have background checks run for you. Websites like Zillow and Apartments.com provide background check services through their platforms. Fees and details may differ depending on which website you use, but oftentimes the seeker can pay a monthly fee to have their background checked through the website and have that information available to all potential housemates. This can be a good way to save time and money for both seekers and providers.

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Reference Example Questions.pdf

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