Key Takeaways
Tenant screening is one of the simplest and highest-impact ways to protect your rental business, especially for small landlords at higher financial risk.
Screened tenants are 1.2x more likely to pay on time than unscreened tenants, according to real Innago screening data from last year.
To protect your business and finances, implement screening best practices and document your criteria to avoid fair housing claims.
Tenant screening is a tried-and-true strategy for reducing late payments and overall financial liability in your rental business. The benefits are well documented and supported by plenty of research. Indeed, the tenant screening industry was valued at $1.34 billion in 2024 and is projected to reach nearly $2.5 billion by 2032. There’s a reason why this industry is growing, as more and more landlords realize the value of harnessing data to predict future behavior.
However, we wanted to take a look for ourselves at what the real cost of skipping a tenant screening report is in 2026. Based on Innago’s own screening data from the past year, we’ll provide a data-driven look into the real value of tenant screening our users are finding, and how this compares to industry benchmarks.
Taking on rental risk by skipping screening is more common than you may think. Here’s why and how to bolster yours.
What Innago’s Tenant Screening Report Data Shows
Most data on tenant screening comes from credit bureaus and academic researchers. Both are useful, but neither can tell you what actually happens long-term after a landlord does or doesn’t run a background check.
We approached the question with real, platform-wide data from the last year. Rather than surveying landlords about their practices, we analyzed real invoice data from rental units throughout 2025, including on-time payment rates across three distinct cohorts: tenants who went through a (tenant-)paid screening, tenants who submitted a free application without screening, and tenants who were never screened through Innago. As you’ll soon see, the differences between the outcomes of these three groups tell a clear story of the purpose and value of screening.
According to the Consumer Financial Protection Bureau, the share of renters incurring a late fee climbed from 15.4% to 23% between 2021 and 2023. And while that figure pulled back to around 14% after the COVID-19 pandemic, more recent signals suggest renewed pressure. In independently owned rentals, for example, late payment rates rose 3 points between 2024 and 2025. With default rates this high (and the cost of eviction likewise high), screening is a must. And it’s not just protection, it also comes with other benefits for landlords.
The On-Time Payment Gap
Our headline finding is straightforward:
Tenants who went through paid screening through Innago paid rent on time more often than the groups who did not.
Specifically, tenants who went through paid screening paid on time throughout their lease at a rate of 61% in 2025, compared to only 52% for tenants who were never screened – a 9-point gap that translates to roughly a 1.2x improvement. Tenants who submitted a free application (some level of screening, but no paid screening) landed in the middle at 58%.
Screening Type | 2025 On-Time Payment Rate |
Paid Screening | 61% |
Free Application | 58% |
Not Screened Through Innago | 52% |
To put that gap in practical terms: A landlord with five units who screens all applicants could statistically expect close to one fewer delinquent tenants per year than a landlord who skips screening entirely. And a landlord with 100 tenants could expect roughly 9 additional delinquent tenants per year by failing to screen applicants.
Given that a single missed payment could spiral into months of follow-up, partial payments, or even eviction fees, that difference isn’t marginal. Rather, it’s the difference between a predictable cash flow and a major financial problem.
Why is this the case? There are two main reasons. The first is self-selection: Tenants who are willing to submit to a credit, background, and eviction check are self-selecting for financial stability and transparency, while someone with weak tenant payment history is less likely to complete the screening process.
The second reason is a signaling effect. Landlords who require tenant screening communicate to those individuals that the rental relationship will be managed professionally and the financial commitment the tenant is signing onto will be taken seriously. This makes tenants less likely to assume they’ll be given any flexibility and more likely to pay on time.
The Online Payment Connection
Have you ever wondered why your tenants who always have their rent in on time tend to pay via credit card or ACH payment? It’s not a coincidence.
In our data, screened tenants were 1.3x more likely to pay rent online (67% vs. 52% for unscreened).
Screening Status | 2025 Online Payment Rate |
Paid Screening | 67% |
Free Application | 62% |
Not Screened | 52% |
This is not to say that tenants who pay offline are bound to be worse tenants, by any means. However, there is a correlation between screening and online rent payments.
Online payments reduce delinquency via automation, recurring payment setup, and centralized record-keeping. Additionally, asking your tenants to undergo a screening process online familiarizes them with the process of managing their rental experience in the same way, increasing the likelihood that they’ll quickly get the hang of paying online.
Getting your tenants to pay online has other benefits for you, too. There’s the convenience of automatic record-keeping, not having to take a trip to the bank to cash the check or deposit cash, auto-inclusion in your financial reporting, and overall efficiency between the time your tenant’s rent leaves their bank account and enters yours.
Why Small Landlords are Most Exposed
When it comes to skipping screening, small landlords are the most vulnerable to the potential consequences.
According to the Census Bureau 2021 Rental Housing Finance Survey, about 70% of rental properties are owned by individual investors, not corporations. Among these, the smallest “mom and pop” landlords are the most vulnerable: A study conducted during the COVID-19 pandemic found that 58% of them do not have access to any lines of credit that might help them in an emergency. That means they have no lifeline if (and more realistically, when) something goes wrong.
Given that evictions can cost upwards of $5,000, even a single one resulting from negligent screening could prevent a small landlord from being able to pay their mortgage, property tax bills, or even to keep their property operational.
You can see how skipping a small, simple step at the beginning of a tenancy can easily snowball into a tight financial bind down the line. If you’re a smaller landlord, this is even more paramount.
Screening as Legal Protection
Another screening benefit that many newer landlords dismiss is its ability of well-documented screening criteria to protect you against fair housing discrimination claims.
Fair housing is a serious and complex topic vastly misunderstood by inexperienced property owners. You may think that since you own the house, you have the right to be as picky as you like about who lives in it. You would be incorrect, and at risk of serious litigation. If you don’t have specific criteria you apply during screening, or if you don’t have those baselines documented properly (written out somewhere and kept formally), any tenant who suspects their fair housing rights have been violated can take you to court over it.
Documenting your criteria can be as simple as writing out three or four minimums all applicants must meet for you to consider them. For example,
650+ credit score
3x monthly income ratio
No prior criminal convictions
No prior evictions
Consistent application of these written criteria can essentially serve as a defensible paper trail if a rejected applicant files a complaint.
Of course, you should also learn and apply the HUD’s fair housing guidelines as well as your individual state’s protections. For instance, in many states, landlords cannot reject applicants based solely on their source of income, age, or physical appearance.
What Good Screening Looks Like in Practice
A sound screening process starts with three core reports:
Credit check
Eviction history
Criminal background check
Credit reports (including credit lines and inquiries, not just the score alone) speak to payment reliability. Eviction histories surface patterns of eviction a credit report won't catch. Finally, background checks flag prior convictions that may affect eligibility. Implementing these three checks are the minimum baseline you should apply to weed out applicants who are at high risk to default on rent or cause other serious problems during their tenancies.
However, most diligent landlords go beyond these three checks. For the most thorough screening, you’ll also want to add:
Landlord references
Employer references
Income verification
Landlord references are one of the most underrated tools available, as a prior landlord can confirm details that never appear in a formal report. Similarly, employer references can help you verify the details a tenant reports on their application. Income verification tools can strengthen this check further by ensuring that the proof of income supplied by a tenant (e.g., paystubs, bank statements, etc.) are real and not forged or fraudulent.
Lastly, good screening is specific to each locality. Beyond the federal Fair Housing protections, the legal landscape varies significantly by state and city. Landlords need to account for local rules that may restrict how they screen. For example:
Criminal histories — cities like Seattle, Portland, and New York City restrict how landlords can use certain criminal records as grounds for denial, also known as “ban the box” laws
Eviction history — some states limit how far back landlords can look
Application fees — several jurisdictions cap what landlords can charge
Adverse action notices — many states require written explanations when denying an applicant
Platforms like Innago make it easy to consolidate the entire process — application, credit check, background check, and eviction report — into a single workflow, so consistency is easier to maintain across every applicant, every time. And did we mention it's free?
Conclusion
Tenant screening has always been common sense. Our 2026 data simply adds the quantitative proof: a 9-point gap in on-time payment rates and a 1.3x increase in online payment adoption. For small landlords with no institutional cushion to absorb a loss, that math is hard to ignore.
Every application processed without screening is a risk that didn't have to be taken. Start screening tenants today — and for a deeper dive into building a legally compliant, effective screening process, check out Innago's Tenant Screening eBook.
FAQs
How much does tenant screening cost?
Tenant screening costs vary widely depending on the platform and what's included, but a typical full screening package runs between $35-$50. Some services charge landlords directly, while others (like Innago) pass the cost to the applicant, making screening free for the landlord.
What does tenant screening include?
A thorough tenant screening typically includes three core reports: a credit check, a criminal background check, and an eviction history report. Most diligent landlords go further by requesting landlord references, employer references, and income verification.
Does tenant screening actually reduce late payments?
Yes–According to Innago's 2026 Tenant Screening Report, tenants who underwent paid screening paid rent on time 1.2x more often than unscreened tenants.
Can a landlord be sued for how they screen tenants?
Yes, under the federal Fair Housing Act, landlords cannot discriminate against applicants based on protected characteristics including race, religion, sex, national origin, disability, and familial status. Many states and cities add further protections (for example, restricting the use of criminal history or prohibiting rejection based on source of income). The best defense is a documented, consistently applied set of screening criteria that you apply to every applicant equally.
What is the average cost of an eviction?
The cost of eviction varies by state but typically ranges from $3,500 on the low end to well over $10,000 when you factor in attorney fees, court filing costs, lost rent, property damage, and vacancy during turnover.
Is tenant screening legal?
Yes, tenant screening is legal and widely practiced—as long as it complies with federal, state, and local fair housing laws. Landlords can legally evaluate applicants based on credit history, rental history, income, employment, and references, provided they apply the same standards to every applicant. What's not permitted is using screening as a pretext for discrimination based on protected characteristics.
