How Tenant Screening Databases Are Changing the Rental Game

Good tenants have always been the bane of the small landlord’s existence, but screening tenants is a process that hasn’t caught up with the complexities of modern rental living, either.

Even if you check references, credit scores and get a gut feeling during a showing, there’s still so much you don’t know about a person until they’ve rented from you for several months. But that gap between what screening can tell you and what you’d need to know? That’s where newer tenant screening databases come into play.

What They Track

Traditional screening focuses on credit and background checks. But rental history databases track tenants across landlords and properties, noting payment habits, lease violations, claims made against deposits and evictions filed. Some systems even allow landlords to report positive tenant history, meaning these focused databases go beyond the “bad” news to include characteristics that a tenant could be proud of if they weren’t thrown in with everything else.

For example, a credit check could show someone hasn’t paid bills, but it won’t show they’ve paid their rent late every month at the last three properties. A background check might keep an applicant off the list due to criminal activity, but it wouldn’t identify someone who was evicted for damage to two homes across three years. These databases are connected directly to renter activity, and that’s the most important information from a landlord’s perspective.

Why Landlords Are Starting to Use Them

Rental patterns have gotten more complicated, and small landlords cannot afford troublesome renters. The more people that move, the more renting costs, and the more expensive bad tenants can be. If a tenant stops paying rent midway through the first month, that’s three months gone and then an eviction for another three months. Then it may take thousands of dollars to repair a property if it was damage caused by that tenant. That’s a huge loss.

Tenant screening, before a rental history database, did not meet the needs of today’s patterns. References can be made up by friends or relatives vouching for bad tenants in person. Many landlords are turning to places like a bad tenant list to get an idea of payment patterns and lease violations when standard screening doesn’t cut it. These systems help landlords share information; if a problem happened somewhere else, it could be documented, too, for landlords to avoid using a tenant who proved a problem elsewhere.

It makes sense; why should one landlord learn their lesson the hard way only for another landlord to potentially make the same mistake? If someone has been evicted from three houses in two years, and they come back with multiple warnings and notes from similar landlords, that’s substantial.

The legal issues, however, are murky

Tenant screening databases occupy a gray area of legality. It depends on where someone rents as to how stringent these databases are; in some places, there’s information about what’s allowed to be reported, how long something is flagged, and whether the tenant should even know about good or bad outcomes from screening. Others barely have regulations in place.

In many cases, however, legitimate databases use FCRA laws (in the U.S.) or equivalent protection elsewhere, meaning tenants should have an appeal process for inaccurate information, and should be notified if tenant screening history prevents the application process from going any further. But such enforcement isn’t consistent.

Landlords also have to be careful; any misallocation of screening results could end up in discrimination claims and lawsuits. There’s protected classes, fair housing laws; there’s no way to maintain fair population statistics if screening is applied selectively among applicants, it must be all or nothing. A database cannot be used for some applicants and not others; if it’s used one time for one applicant, it needs to be applied across the board, and someone who would be denied because of something not legally justifiable cannot be denied.

What Tenants Think About Them

Unsurprisingly, tenants are mixed about these databases. The biggest area of concern is accuracy. If people mix names up, erroneously report things that might have gone wrong due to the landlord instead of the tenant, or generalizes something like mediation into an eviction against nonpayment, it follows someone everywhere and doesn’t allow them to rent anywhere.

The issue is getting blacklisted in one of these databases; if they’re wrong, or if they’re right but with context, they’re nearly impossible to clear one’s name. Some databases allow easy access to errors; some do not have any process altogether. Even if something is deemed accurate, at times it needs circumstances. A tenant who withheld rent because the landlord wouldn’t fix a broken furnace in winter will end up on the same list as someone who decided they no longer wanted to pay for rent without reason.

There’s also privacy, many tenants don’t know these databases exist; their rental histories are tracked and reported without their knowledge. This is disconcerting, especially when tenants find out post-rejection for an apartment.

How Effective Are They?

That depends on who you ask. At the moment of writing this report, it’s up in the air. Sometimes they are legitimate; if someone has been documented reliably in multiple places without red flags, but it’s also clear that these notes aren’t running through some computerized system crunched for cons credit, in general, it’s found that there are few downsides.

Sometimes this is effective as part of a more comprehensive approach. A landlord can find out information through a database that would have been missed otherwise, repeated evictions over patterns of damage, but sometimes the information is so lackluster it’s not worth the expense.

Some landlords report keeping tenets away from re-evicted tenants over their evictions in months and patterns established elsewhere regarding chronic late payment or damage tenants without just cause. Others find it ineffective and not worth it as too little information exists to justify moving forward.

Where is Technology Headed

Towards a more collaborative tenant screening experience. If more landlords buy into reporting systems, the more value they have as comprehensive systems with plenty of information instead of little data compared from different owners across different locations – but even home systems make it easier.

Technology makes records easier to find; it makes tracking easier with reporting plus notes that find similar histories across platforms that update routinely.

Some emerging platforms want access to more positive reporting than negatives merely, the notion is that good tenants can build great rental resumes that put them ahead of better properties, while problem tenants can rein back their information through good behavior over time.

There’s also a move toward allowing tenants access to their own data. Some systems allow tenants access to edit mistakes but also give them autonomy over their own location history – if past renting is shared beforehand with interested tenants, participants instead of something done to them.

Making Sense of It All

These databases represent a revolution in how rental histories come to life. Transparency benefits landlords who want to protect themselves, but ultimately it creates pitfalls based on accuracy and fairness that an industry is still trying to figure out, and privacy concerns that haven’t been totally worked out yet.

For landlords it’s helpful when paired as part of a comprehensive tool for good screening purposes; for tenants it’s sobering that renting behavior now means something beyond just one relationship at a time.

For rental history at large, it shifts the balance of power between landlords and tenants in ways that will continue to evolve in an uncertain future.

Ultimately it comes down to these databases as tools, no crystal balls. They create data points that need evaluation but compassion must prevail in ever realistic housing situations trying to make sense of an increasingly expensive and disparate market.