Property Management App Builder

Tenant Screening Process: Steps and Fair Housing Basics for Small Landlords (2026)

A step-by-step tenant screening process for small landlords, with written criteria, income and reference checks, FCRA adverse action notices and the fair housing rules that apply.

Floot ·

Key Takeaways

  • Write your criteria before you advertise. Income, credit, rental history, occupancy and any criminal history policy, applied the same way to everyone. Written criteria are your best defense if a decision is ever questioned.
  • The Fair Housing Act covers nearly all rentals. It bars discrimination because of race, color, national origin, religion, sex, familial status and disability. Its small-landlord exemptions are narrow and never cover discriminatory advertising.
  • Reports need a permissible purpose and, after a no, a notice. Under the FCRA, if a credit or background report played even a small part in denying someone, requiring a co-signer or charging a higher deposit, you owe an adverse action notice.
  • State and city law often adds more. Examples: New York caps background and credit check fees at the actual cost or 20 dollars, whichever is less, and many places protect source of income or limit criminal history questions.
  • Process applications in order and keep records. Date-stamp each complete application, decide in that order, and keep the file. Shred or securely delete reports when you are done with them.

Quick-Start Prioritization Framework

StepWhat you doRule to remember
1. CriteriaWrite income, credit, history and occupancy standardsSame standards for every applicant
2. AdvertiseList the unit with neutral wording42 U.S.C. 3604(c) bans discriminatory ads, even for exempt owners
3. ApplicationCollect application, ID, consent, fee if allowedState fee caps vary (New York: actual cost or 20 dollars)
4. ReportsPull credit, eviction and background reportsWritten permission and housing-only use
5. VerifyIncome, employment, landlord referencesTreat every applicant’s documents the same way
6. DecideApprove, approve with conditions, or denyAdverse action notice if a report influenced a no or conditions
7. RecordsKeep the file; dispose of reports securelyFTC Disposal Rule

Screening is where a small landlord makes the biggest decision of the tenancy, and where the most avoidable legal mistakes happen. A good process is boring on purpose: criteria written down before you advertise, the same steps for every applicant in the order they applied, reports pulled with permission, and a written notice whenever a report influenced a no. This guide walks through each step, explains the federal fair housing and Fair Credit Reporting Act rules that apply to almost every landlord, and points out where state and city law adds more. It is general information, not legal advice; check your state and local rules or ask a local attorney before you change your process.

Step 1: Write your screening criteria

Before the listing goes up, write one page that says what an approvable applicant looks like. Hand it to every applicant or post it with the listing. If two people apply for the same unit, the criteria decide, not your impression from the showing.

Income

A common standard is gross monthly income of a set multiple of rent, often two and a half or three times. At 1,500 dollars rent, three times is 4,500 dollars a month, or 54,000 a year. Say how you count income from roommates (combined or each), from benefits and vouchers, and from self-employment. Several states and cities protect source of income, which can include housing vouchers; if yours does, count that income the way the law requires.

Credit and debt

Decide what you are actually checking. A minimum score, or specific items such as unpaid rent owed to a previous landlord, utility collections or a recent bankruptcy? Medical debt says little about whether someone will pay rent. Be specific so you can explain the decision.

Rental history and evictions

Set a lookback period (for example, the last three to five years) and say what counts: a judgment for unpaid rent, or any filing? Eviction filings that were dismissed or settled are not the same as judgments, and some states limit what screening companies can report or what landlords can consider.

Criminal history

The FTC’s guide for landlords warns that a blanket refusal to rent to anyone with a criminal record may violate the Fair Housing Act. In September 2025 HUD withdrew its earlier guidance documents on the use of criminal records in housing, saying the withdrawal is not necessarily final, but the Act itself did not change. Many states and cities have their own fair chance housing rules on when and what you may ask. A narrow written policy, limited to recent convictions that relate to the safety of residents or property, with a chance for the applicant to explain, is the defensible approach in most places.

Fair housing basics every landlord needs

HUD describes the Fair Housing Act as covering nearly all housing, including private housing. It prohibits discrimination in renting because of race, color, national origin, religion, sex, familial status (households with children under 18, and pregnant people) and disability.

The exemptions are narrow

Under 42 U.S.C. 3603(b), the Act’s main ban does not apply to a building with four or fewer units where the owner lives in one of them, or to a single-family house rented by a private owner who holds no more than three such houses and does not use a broker or agent. Even then, the advertising ban in Section 3604(c) still applies, and state or local law may cover you anyway. Most small landlords should assume they are covered.

Advertising

Describe the unit, not the tenant you want. “Two-bedroom near the train, no smoking” is fine. “Perfect for a young professional,” “no kids,” “Christian household” or “English speakers only” each states a preference based on a protected trait. Occupancy limits should follow your local code or a reasonable standard, not be a way to exclude families.

Disability: accommodations and modifications

Section 3604(f)(3) makes it discrimination to refuse reasonable accommodations in rules, policies, practices or services when needed for a person with a disability to use the home, or to refuse reasonable modifications at the tenant’s expense. The most common case is an assistance animal in a no-pet building. HUD withdrew its 2020 assistance animal guidance in September 2025, but the statutory duty remains. Handle each request individually, ask only for the information you need to evaluate it, and do not charge a pet fee for an approved assistance animal.

State and local protected classes

Many states and cities add protected classes such as source of income, sexual orientation, gender identity, age, marital status, military status or immigration status. Check your state’s civil rights agency and your city’s housing office before you write criteria.

Steps 2 and 3: The application

Use one application for everyone, and take complete applications in the order they arrive. Note the date and time on each.

What to collect

  • Full name, date of birth, current and previous addresses for your lookback period, with landlord contacts.
  • Employment or income sources, with documents (pay stubs, offer letter, benefit letters, bank statements).
  • Government ID shown at showing or application, with any copy stored securely.
  • Every adult who will live in the unit, each with their own application.
  • Written consent to pull consumer reports.
  • Pets, vehicles and requested move-in date.

Application and screening fees

Fees are regulated in many places. New York’s Real Property Law Section 238-a bars application processing fees and caps background and credit check fees at the actual cost or 20 dollars, whichever is less, and the fee must be waived if the applicant provides a check done in the past 30 days. Other states cap fees or require refunds of unused fees. Many landlord platforms have the applicant pay the screening company directly; check that this is allowed where your property is.

Step 4: Pulling reports under the FCRA

Credit reports, tenant screening reports, background checks and even reference checks run by a third-party company are all consumer reports under the Fair Credit Reporting Act, according to the FTC.

Permissible purpose and permission

You may get a report on someone who applies to rent or renew, or with their written permission. You certify to the screening company that you will use it only for housing. Get signed consent on every application anyway; it avoids arguments.

Read the report against your criteria

Check identity matches before you act on anything. Screening reports can mix up people with similar names. If a criminal or eviction record does not match the applicant’s date of birth or address history, do not rely on it, and tell the applicant so they can dispute it with the screening company.

Step 5: Verifying income and references

Verification is where fraud shows up. Edited pay stubs and friends posing as landlords are common enough that a consistent check is worth ten minutes per applicant.

Income

Compare pay stubs with bank deposits. Call employers through a number you find yourself, not the one on the application. For self-employed applicants, ask for tax returns or several months of statements. Apply the same documents standard to every applicant.

Previous landlords

Confirm ownership through public property records before you call. Ask factual questions: dates, rent amount, whether rent was paid on time, whether notice was given, whether they would rent to the applicant again, and whether any deposit was withheld and why. Write down the answers. The current landlord may want a good tenant to stay, or a bad one to leave, so the previous landlord is often more useful.

Step 6: Deciding and the adverse action notice

Your decision has three outcomes: approve, approve with conditions (co-signer, higher deposit where your state allows it, or higher rent), or deny.

When you owe a notice

The FTC says you must give an adverse action notice when you deny an application, require a co-signer, or require a higher deposit or rent than other applicants, if information in a consumer report played any part in the decision, “even if the information in the report played only a small part in the overall decision”.

What the notice must say

  • The name, address and phone number of the screening company that supplied the report.
  • A statement that the company did not make the decision and cannot explain why it was made.
  • The applicant’s right to dispute inaccurate or incomplete information with that company.
  • The applicant’s right to a free copy of the report if they ask within 60 days.
  • If you used a credit score: the score, its range and source, the date it was created and the key factors that hurt it.

Put it in writing

The FTC allows oral notices but recommends written ones. A written notice, kept in the file, is your proof that you complied. Many screening services generate one for you.

A worked example

Two applicants apply for a 1,500 dollar unit. Your criteria are income of three times rent (4,500 dollars a month) and no unpaid rent judgments in five years. Applicant A earns 5,200 dollars a month and has no judgments: approve. Applicant B earns 4,800 dollars but the report shows a 2023 judgment for unpaid rent. You offer approval with a co-signer. Because the report drove that condition, B gets an adverse action notice. These are illustrative numbers, not a recommended standard.

Step 7: Records, privacy and disposal

Keep each application file with your criteria, the date received, the reports, your notes and the decision letter. If a complaint is filed, that file is how you show you treated everyone the same.

The FTC’s Disposal Rule requires you to destroy consumer reports securely when you no longer need them: shred, burn or pulverize paper, and delete electronic files so they cannot be read or reconstructed. Do not leave reports in a shared email inbox.

Common mistakes in tenant screening

Most screening problems come from inconsistency, not bad intent.

  • Making up criteria after meeting the applicant.
  • Screening the first applicant lightly and the third heavily.
  • Steering families to ground-floor or “quieter” units.
  • Charging pet fees for an approved assistance animal.
  • Blanket bans on any criminal record or any eviction filing.
  • Skipping the adverse action notice because the decision was “mostly” about income.
  • Charging application fees above your state or city cap.
  • Keeping reports in email forever.

If you’d rather not run this by hand

If you’d rather not do this yourself, most landlord platforms pair screening reports with application forms, and you can also build a simple applicant tracker with Floot that holds your written criteria, a dated application queue and copies of each decision letter. Floot does not run screening reports itself, so you would still order reports from a screening company.

Frequently Asked Questions

What are the steps in tenant screening?

Write criteria, advertise neutrally, take applications in order with written consent, pull reports, verify income and references, decide using the same standards for everyone, send an adverse action notice when a report influenced a denial or conditions, and keep or securely dispose of records.

Do small landlords have to follow the Fair Housing Act?

Almost always. The exemptions in 42 U.S.C. 3603(b) cover only owner-occupied buildings of four or fewer units and some single-family homes rented without a broker, the advertising ban still applies, and state or local law may cover you regardless.

Do I need to send an adverse action notice if I deny someone mostly for low income?

If a consumer report played any part in the decision, yes. The FTC says the notice is required even if the report played only a small part.

Can I refuse to rent to anyone with a criminal record?

A blanket ban is risky. The FTC warns it may violate the Fair Housing Act, and many states and cities have fair chance rules. Use a narrow written policy focused on recent, relevant convictions and allow the applicant to explain.

How much can I charge for an application fee?

It depends on your state and city. New York, for example, bans application processing fees and caps background and credit check fees at the actual cost or 20 dollars, whichever is less. Check your local rule.

Can I require a higher deposit instead of denying an applicant?

Often, within your state’s deposit limits, but if a consumer report led to that condition, you must send an adverse action notice.

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