Running a background check on a rental applicant sounds straightforward. Pull a report, read the numbers, make a decision. Done.
But we talk to owners all the time who are either skipping steps that expose them to real legal risk, or obsessing over the wrong data points entirely. A landlord in Midtown Memphis spent four months in a lease dispute — on a unit he thought he’d screened — because he used a free online tool that missed an active judgment from a prior landlord. A $45 report through a proper screening platform would have caught it.
This post covers how tenant screening actually works: what to check, what the law requires, where owners get tripped up, and how to make a defensible, consistent decision on every applicant.
In This Guide
Why Screening Matters More Than You Think
Evictions in Shelby County, Tennessee can be costly for landlords—court filing fees alone run roughly $100–$130, and when you factor in lost rent during the process (often one to three months) plus turnover costs, total out-of-pocket losses can run into the thousands of dollars. We’ve seen it run higher. And that’s on a property renting for $900 a month — which is about where most of our portfolio sits across the 700-plus units we manage.
The point isn’t to scare you. The point is that a bad placement doesn’t just cost you one month’s rent. It costs you months of income, attorney time, the emotional energy of a prolonged eviction, and usually a unit that needs work before it’s rent-ready again.
A thorough screening process is the single best investment a rental owner makes before a tenant moves in.
What a Complete Background Check Actually Covers
A lot of owners hear “background check” and think it’s just a credit score. It’s not. A proper screening report should cover several distinct layers:
- Credit history: Payment patterns, open collections, outstanding debt, and how the applicant handles financial obligations over time.
- Criminal history: Arrests vs. convictions, felony vs. misdemeanor, and how recent the record is. Context matters here.
- Eviction history: Prior filings, judgments, and dismissed cases. Not the same thing, and treating them identically is a mistake.
- Identity verification: Confirm the person applying is who they say they are. Fraudulent applications happen more than most owners expect.
- Employment and income verification: We’ll go deeper on this one below because it trips up a lot of landlords.
We run screening through AppFolio, which pulls comprehensive reports across all of these categories. The cost is typically $30 to $60 per applicant, and in most cases that fee can be passed directly to the applicant as an application fee.
Setting Consistent Screening Criteria Before You Accept a Single Application
Here’s the thing that gets owners into trouble more than any other single mistake: they set criteria after they’ve already seen the applicant.
That’s a Fair Housing problem. If you require a 620 credit score from one applicant and quietly waive it for the next without documented justification, you’re exposed. First-offense HUD fines can reach $25,597 or more. We’re not being dramatic — that’s the actual number from the Federal Register.
“First-offense HUD fines can reach $25,597 or more.”
Before you list a property, write down your screening criteria. Minimum credit score. Income-to-rent ratio. Rental history requirements. Criminal history policy. Pet policy. All of it. Documented. Applied the same way to every applicant.
Running background checks selectively — only on applicants you’re “unsure about” — is one of the fastest routes to a Fair Housing complaint in Shelby County. If you screen one applicant, you screen every applicant the same way. No exceptions.
Gus, our property manager, walks new owners through this before we ever post their first listing. Getting the criteria in writing upfront protects the owner and creates a clear, defensible record if a rejected applicant ever files a complaint.
Income Verification: The Step Most Landlords Rush
The standard income-to-rent ratio we use: applicants should gross at least 3x monthly rent. On a $900/month unit, that means verifying at least $2,700/month in documented income.
The word “documented” is doing a lot of work in that sentence.
We’ve talked to owners who accepted a pay stub at face value without ever confirming the employer. One owner we work with skipped the income verification step entirely on an applicant who self-reported employment. Within the first quarter, that tenant was two months behind on rent. By the time the Shelby County eviction was resolved, the owner had lost roughly $4,200 in lost rent and court costs.
The fix is simple: call the employer. Or request a written verification letter. Bank statements as a supplement to pay stubs help too. It adds maybe 20 minutes per application and can save you thousands.
Credit Score: One Data Point, Not the Decision
We see Memphis landlords fixate on the credit score in ways that don’t actually reflect risk.
A 580 applicant with two years of on-time rent payments, a verified income of $2,900/month, and a solid landlord reference is often a lower-risk placement than a 680 applicant with job changes every six months and no rental history. Credit score tells you part of the story. It doesn’t tell you the whole story.
Our general benchmark for Memphis rentals is 580 to 620 as a floor, but that number flexes based on property type and submarket. In Cordova, where we tend to see more long-term, family-oriented tenants, we’ll apply a 620-plus threshold with a two-year employment history requirement. Near the University of Memphis in the 38111 zip code, we’re often looking at younger applicants with thin credit files, so income verification and co-signers carry more weight than the credit score alone.
How to Read an Eviction Record Without Overreacting
This comes up constantly. An owner sees an eviction filing on a background report and automatically disqualifies the applicant. That’s not always the right call.
A dismissed eviction and a judgment eviction are very different things. A filing that was dismissed often means the tenant and prior landlord resolved the issue, or the case lacked merit. A judgment means the court sided with the landlord.
We once reviewed an applicant with a single eviction filing from six years prior. Recent rental history was clean, and verified income came in at $3,100/month against an $850 rent. Our team approved the applicant with an additional deposit. That tenant renewed their lease the following year without a single incident.
The full picture matters. Blanket rejection of anyone with a filing on record is lazy screening — and it may also put you at odds with fair chance housing principles that are gaining ground in markets around the country.
What Tennessee Law Requires When You Reject an Applicant
Two compliance points Memphis landlords need to have on their radar:
The Adverse Action Notice
Under the Fair Credit Reporting Act, if you reject an applicant based on information in a background report, you must send a written adverse action notice. This tells the applicant which report you used and their right to dispute it. Skipping this step is a federal violation. For willful FCRA violations — such as failure to provide an adverse action notice — statutory damages run $100 to $1,000 per violation, plus possible punitive damages and attorney fees; negligent violations carry actual damages and attorney fees but not statutory damages. It’s not a gray area.
URLTA Compliance in Shelby County
Tennessee’s Uniform Residential Landlord and Tenant Act applies in counties with populations over 75,000. Shelby County, with a population well over 900,000, is generally considered to fall within the counties covered by Tennessee’s Uniform Residential Landlord and Tenant Act. This means you’re operating under a more structured set of procedural rules on screening, rejection notices, and security deposits. Tennessee also requires landlords to return security deposits within 30 days of lease termination.
Screening compliance isn’t optional in Shelby County. The URLTA applies, the FCRA applies, and Fair Housing applies. All three, every time.
Screening Section 8 and HUD Applicants
Revid manages Section 8 units, and we get questions from owners about how the screening process works for voucher holders.
The short answer: HUD applicants still go through the same background check process. Criminal history and rental history are still fair game. What you cannot do — and this is worth checking current local ordinances on — is automatically reject applicants solely based on their source of income in markets where local protections apply. Tennessee does not have statewide source-of-income protections, but Memphis has seen ongoing legislative conversation around this.
Our advice: manage Section 8 units through a property manager who stays current on local policy. This market moves, and what applied last year may not apply next year.
Making the Final Call
Screening is not a pass/fail quiz. It’s a review of risk factors weighed against each other in context.
A few things we look at before making a final recommendation to an owner:
- Eviction context: Dismissed or judgment? How old? What was the rent amount involved?
- Credit pattern: Is the low score from a rough period that’s now behind them, or is it an ongoing pattern of non-payment?
- Income stability: Consistent employer over 12-plus months or frequent gaps?
- Rental history: Can a prior landlord confirm on-time payment and no lease violations?
- References: Do the landlord references actually pick up the phone? A landlord who won’t talk is often a signal.
One long-term client described their experience with Revid this way after six-plus years: the consistency and responsiveness of the team made the difference in their decision to stay. That’s what good management does on the front end too — it builds placements that last.
If running a compliant, defensible screening process on every applicant feels like more work than you bargained for, we’re open to a conversation about how we handle this across the 700-plus units we manage in Memphis.
FAQ
What credit score should I require for a rental applicant in Memphis?
We generally recommend a floor of 580 to 620 for most Memphis rentals, though the right threshold depends on your property type, location, and rent level. In higher-stability submarkets like Cordova, 620-plus with a consistent employment record is reasonable. Near the University of Memphis, income verification and co-signers often matter more than the credit score itself.
Do I have to send a rejection letter when I turn down a rental applicant?
If you rejected them based on anything in a background or credit report, yes. The Fair Credit Reporting Act requires a written adverse action notice identifying the report used and the applicant’s right to dispute. This is a federal requirement, and violations can expose landlords to significant civil liability, including statutory damages and attorney fees.
Can I screen Section 8 applicants the same way I screen everyone else?
You can apply the same criminal history and rental history criteria to HCV/Section 8 applicants that you apply to everyone else. What you should confirm with a local property manager is whether any Memphis or Shelby County ordinances affect how you handle source-of-income screening, since that area of law has been in active discussion locally.
What’s the difference between a dismissed eviction and a judgment eviction on a background check?
A dismissed eviction means the case was dropped or resolved before the court ruled against the tenant. A judgment means the court sided with the landlord. They represent very different levels of risk, and automatically disqualifying anyone with any filing on record often means passing on qualified applicants who deserve a fair review.
How much should I charge for a rental application fee in Memphis?
A comprehensive screening report through a professional platform typically costs $30 to $60 per applicant. That fee can generally be passed to the applicant as an application fee. The exact amount you charge should reflect the actual cost of the report you’re pulling, and it should be the same for every applicant.
What happens if I don’t verify income and just accept a pay stub?
You’re taking on real risk. Falsified pay stubs are not rare, and one missed verification can result in a tenant who can’t sustain rent by month three. An eviction in Shelby County runs $3,500 to $5,000 on average when you factor in lost rent and court costs. A five-minute phone call to confirm employment is cheap insurance.