Simple, Effective Screening for Better Tenants in Texas

Background checks are a vital part of thorough tenant screening. Every landlord needs to know the history of every applicant. Background checks give you a good idea of whether someone makes payment on time, stays out of massive debt, has a criminal past, and a lot more.

Background checks also reduce the chances of tenant turnover, protect you from liability, and help you and other tenants remain safe.

In this article, we’ll help you understand what background checks consist of, how to ensure you get the information you need, and what you need to know about your state’s rules regarding them.

What are Background Checks? 

Background checks typically consist of a credit report, criminal history, income verification, eviction history, and a rental application. 

Credit Report

Aside from a lease agreement, a tenant credit report might be the most crucial document for a landlord to understand. This document is one of the best ways to determine whether someone will pay on time and in full. Here are the main components of a credit report: 

• • Basic information like former names/aliases, current and previous addresses, etc. 
  • Fraud indicators like invalid phone numbers or phony social security numbers 
  • Tradeline summaries that give a snapshot of an applicant’s active accounts  
  • Inquiries that show a list of companies who viewed an applicant’s credit file over the last two years 
  • Credit/resident score 

A credit score is a numerical value anywhere from 300-850 that helps illuminate an applicant’s creditworthiness. If an applicant has a score of 500 or less, proceed with caution. Most reliable tenants will have a score above 560. 

A resident score is similar to a credit score, but more directly reflects someone’s reliability as a tenant. Both scores are proprietary, so the exact formulas aren’t available to the public. That said, resident scores typically include a recommendation on whether to accept an applicant or not (this shouldn’t be treated as gospel obviously, but it can be helpful).  

Criminal History

Wide-sweeping national databases, more narrow specific state databases, and granular county records are the main elements of most criminal history reports. 

Income Verification

There are several ways to verify income. Let’s look at some of the most common here:  

• • Pay Stubs: Paychecks are the most common way to verify income. Anyone with full-time or part-time employment can make copies of paychecks and send them to you. 
  • Yearly Tax Returns: A federal tax return is another option to obtain proof of income. This is often an excellent option because it’s an official legal document, so it’s difficult to fake. 
  • W-2 Tax Form: These forms show employer’s withholding payroll taxes from workers’ earnings. This is another good option because it’s a document directly from an employer. 
  • Bank Statements: This method is especially effective for self-employed applicants because they won’t have regular pay stubs like those who work for traditional businesses. 

Important Note: Innago’s new income verification feature, which you can learn more about here, makes it easier than ever to ensure your tenants have the necessary funds to pay you. 

Eviction History

Except in cases where overdue rent went to collections or a previous landlord reports late payments, credit reports don’t usually show evictions.  

Federal law typically prevents evictions from being shown on a background check after seven years, but this figure varies by state. 

If you cannot see an applicant’s eviction history on a credit report or obtain the information by contacting their previous landlords, then you may pull an eviction report. However, certain states have restrictions on different kinds of reports (we’ll address those if they’re relevant later in this piece).  

Eviction history matters because the cost of an eviction for landlords is often between $4,000 and $7,000 or more. That means that if a tenant was evicted, they likely left their previous landlord with no other choice. 

Application

A rental application is a preliminary form used to obtain basic information about an applicant and their eligibility. Most applications ask for this information:  

• • Basic Contact Information: Think entire legal name, cell phone number, email address, etc. 
  • Current and Former Renting Experience: Four to five years back is typically plenty. 
  • Landlord References: Contact previous landlords and get their take on applicants. This is a critical step that some landlords skip over. Make sure you’re not one of those landlords. 
  • Employment History: You want to know current and former employers and get consent to contact them. 
  • Written Permission to Run a Credit Check 
  • Legal Disclosures: Here’s a helpful article on what disclosures to include. 
  • Additional Inquiries: Be careful here. Make sure you don’t ask questions that violate laws. Only ask about things like pets or smoking. And make sure you’re consistent. 

Why Do You Need to Run a Texas Background Check? 

Background checks in general are utilized by a variety of groups: landlords, employers, lenders, licensing agencies, government agencies, etc. They are run to ensure that a candidate for a job, license, property, or loan is properly qualified and does not have a history of behavior that would interfere with their ability to perform the duties required under contract. Background checks minimize legal liability, protect companies’ assets and current employees, and are sometimes required by clients.  

When it comes to landlords, a Texas background check is needed to: 

• Protect the safety and property of other tenants 

• Reduce tenant turnover 

• Minimize legal liability and gain insight into a Texas criminal background check 

• Increase the likelihood of on-time rental payments 

• Avoid conflict and crime in the rental community 

• Narrow down applicants for a high-demand property 

• Prevent expensive and lengthy eviction processes 

Texas Background Checks 

Landlords in Texas should run a background check on potential tenants as a precaution and general policy. Here are three reasons to run a Texas background check: 

1. Identify rental application fraud 

Rental application fraud, which occurs when a tenant lies on their application or submits falsified pay stubs, bank statements, etc., is on the rise throughout the country, but particularly in Texas. In all of the U.S., Houston is home to the second largest application fraud rate at 16.2%. Dallas/Fort Worth’s 13.2%, directly behind it, is the third highest application fraud rate of any city in the nation. Thus, these scams are something you need to keep an eye out for in Texas. Thorough background checks can save you from a nightmare scenario later. 

2. Avoid future evictions 

Evictions in Texas are long and expensive processes, often taking one to three months total and costing thousands of dollars. Additionally – because tenants with a previous eviction are more likely to be evicted again — understanding eviction history is essential for avoiding turnover. 

3. Learn about the existence or nature of illegal activity 

It’s also important to run criminal background checks in Texas. You want to protect other residents and your property. While landlords cannot have a blanket policy for denying people with a Texas criminal record, certain crimes (like sex offenses) restrict convicts from certain housing options and are valid reasons to deny a tenant. There can also be other criminal history-related reasons to deny an applicant, so checking criminal records matters.  

How Much Do Criminal Background Checks in Texas Cost? 

Background checks are relatively affordable across the U.S., but their costs vary depending on the area searched and the level of information requested. Searching national records typically costs between $13-60 per person, while searching an individual state’s records like Texas typically costs between $10 and $25 per person. For instance,  County records, which tend to be more accurate and up to date, cost $16-$25 per person per county checked. You can learn more about the different types of background checks in this article on the topic. 

Which Laws Apply to Texas Background Checks? 

Texas background checks cannot be used by anyone for any purpose. Due to fair housing protections, the use of credit reports and criminal background checks is restricted. A criminal background check Texas considers compliant must adhere to federal and state laws. 

The Fair Credit Reporting Act 

The FCRA is a critical federal law from the federal government related to background checks. The FCRA protects consumer privacy, ensures fairness and accuracy of information obtained and divulged by consumer reporting agencies, and dictates how employers can use information from pre-employment background checks. 

Title VII of the Civil Rights Act of 1964  

This Act prohibits employment discrimination against job applicants and employees in protected groups. It also applies to people whose background checks show criminal convictions in the sense that employers need to individually determine if the criminal conviction directly impacts the specific role they applied for. 

The Texas Regulatory Consistency Act (TCRA) 

The Texas Regulatory Consistency Act (TCRA) preempted local law mandates. Per the TRCA, local governments cannot enact laws that go beyond state law. 

This law invalidates numerous local laws, including municipal and county ban-the-box laws, fair chance hiring policies, specific local labor laws, and additional laws that give workers rights beyond what the state law provides, or local laws that require employers to take additional steps that aren’t mandated by state law. This law is important to read about in detail, though, because it contains nuances (as with most laws). 

As an example of how the law preempts local laws, let’s look at Austin and its employment background check rules. The city of Austin enacted a ban-the-box ordinance in 2016, preventing all private and public employers with more than 15 employees from inquiring into criminal records until after they had extended conditional offers of employment. The TCRA invalidated this ordinance in 2023. 

One more example is the Harris County Fair Chance Hiring policy. This public-sector focused ordinance is now preempted as well. 

Expunging Records 

Texas limits the ability to Expunge records. People can only get expungement for these things per Tex. Code Crim. Proc. § 55.01: 

• Conviction of unlawfully carrying weapons before September 1st, 2021 

• Completion of a sentence wherein a final verdict is not entered while the defendant serves a term of probation for a Class C misdemeanor  

• Dismissal or acquittal of other misdemeanor or felony charges 

Even if someone wasn’t convicted for the following, there will still be a waiting period for application: 

• Class A misdemeanor completion of adjudication: 180-day waiting period 

• Felonies: Three-year waiting period 

• Class A and B misdemeanors: One-year waiting period 

For other offenses, people may try to seal criminal records by obtaining a non-disclosure order per Tex. Govt. Code § 411.074. 

Adverse Actions 

If you decide to deny an applicant, it’s critical to know rules and regulations regarding rejecting potential renters. Read this article to review legal reasons for denial and how to abide by the Fair Housing Act. If you deny an applicant based on information in consumer reports, you’ll need to send them an “adverse action” notice. Read more about these notices here. 

Know Texas Background Check Laws 

Before you run a background check in Texas, be sure you’re aware of the state and federal laws that apply to their use. Keep in mind that while all Texas counties are subject to state-wide laws and executive orders, some counties may enforce additional regulations. Additionally, you must get written consent from a tenant before running a background check. Be sure you’re educated on the law in your region and adhere to the HUD’s recommendations. 

How Far Back Does a Background Check Go in Texas? 

When you use consumer reports to make tenant decisions, you must comply with the Fair Credit Reporting Act (FCRA). 

Section § 605 – 15 U.S.C. § 1681c of The Fair Credit Reporting Act (FCRA) applies in all 50 states and mandates a seven-year restriction on reporting certain background check information like civil suits, civil judgments, and arrest records (except in certain cases where an employer is hiring for a job with a salary more than $75,000). The FCRA doesn’t have similar timeline restrictions on criminal convictions, but some states restrict reporting conviction information at the state or local level.  

While similar to the FCRA, Texas does have a few additional restrictions wherein consumer reporting agencies cannot report the information below when it’s seven (or 10 years where specified) in the past (for jobs with yearly salaries under $75,000): 

• Bankruptcies beyond 10 years 

• Civil lawsuits 

• Civil judgments 

• Arrests 

• Indictments 

• Paid tax liens 

• Medical collections regardless of age if the individual had insurance at the time the debt was incurred 

• Any other item that is older than seven years 

These restrictions aren’t valid when a role has an annual salary of $75,000 or greater. Likewise, they aren’t valid when an employer is hiring for a role in the insurance industry and failure to report would violate Texas law.  

How to Run Background Checks in Texas 

When you need to conduct background checks in Texas, most people either conduct a DIY background check or use a third-party provider. If you run a DIY background check, you should probably get criminal history from the Texas Department of Public Safety, contact an applicant’s former landlords and employers, obtain a credit report (Equifax, Experian, and TransUnion are the three major credit reporting agencies that compile credit information), verify income, look at the sex offender registry, and ensure you have all the information you need to conduct thorough tenant screening. DIY checks can be extremely risky, though, because it’s easier to run afoul or relevant laws inadvertently (unless you’re very well-versed in the law).  

For expediency and the peace of mind that you’re working with a company abiding by applicable laws, a better option for most landlords is hiring a third-party provider (many of whom bundle credit, resident, criminal, and eviction histories together as a package). You can select the kind of reporting you need and let the third-party take care of the collection and reporting process. 

Background Checks with Innago 

At Innago, we’ve partnered with Experian to help you review background check information and identify high quality applicants. Running a background check through Innago allows you to quickly and easily identify the best applicants and ensure their application information is accurate. Likewise, Innago’s income verification feature helps our users verify reported income by connecting to their bank account, payroll provider, or by uploading documents. 

Disclaimer: This article is for educational purposes only and does not constitute legal advice. We recommend you consult with professional counsel if you have legal questions regarding your specific practices and compliance with relevant laws.