Know your tenant (KYT) for tenant background checks

Property managers are facing a sharp rise in fraudulent rental applications, from forged income documents to false applicants. 

That has created new pressures for property management teams to verify who an applicant is, whether they can reliably pay rent, and whether the information they provide is accurate and authentic.

“Know Your Tenant” (KYT) is emerging as the modern framework for meeting those expectations. Borrowed from financial services, KYT brings the rigor of identity verification, income confirmation, and fraud prevention to the leasing process. The result is a digital rental process that’s safer for owners, simpler for applicants, and far more efficient for property management teams.

This article will explore critical elements of KYT, the benefits, and how Plaid can help your rental process. 

Know your tenant (KYT) for applicant verification

Know Your Tenant (KYT) refers to a modern approach to tenant verification that mirrors the principles of Know Your Customer (KYC) programs in the financial services industry. Instead of relying on static documents and manual checks, KYT uses verified financial and identity data to help property managers confirm who an applicant is and whether they can meet their rental obligations.

At its core, KYT adapts long-standing compliance practices—such as identity verification, income verification, and fraud detection—to the rental market. With the wider availability of digital compliance tools, property managers can evaluate applicants with the same level of accuracy that banks use when onboarding customers or approving financial products.

KYT is becoming increasingly critical as the industry shifts to digital leasing. When applicants submit documents online, property managers rarely have the chance to validate them in person. KYT closes the risk gap by offering reliable, data-driven verification that keeps the rental process secure without increasing user friction.

The benefits of KYT 

According to a 2024 National Multifamily Housing Council Survey, 93.3% of owners, managers, and developers had experienced rental application fraud in the last 12 months. 84.4% had experienced income documentation fraud, while 70% had encountered fraudulent identity information in rental applications. 

The prevalence of fraud presents a challenge in balancing assessing risk with speedy approvals for qualified renters. Without a thorough risk assessment, there can be costly evictions or missed rent payments. Yet without speedy approvals, qualified renters might move on to another unit during the application process.

Digital-first leasing has also changed expectations. Applicants expect to apply, upload documents, and sign leases entirely online. That convenience removes the in-person validation step many leasing teams used to rely on, which means property managers need digital ways to confirm tenant information

There are compliance considerations as well. Property managers must navigate fair housing rules, safeguard applicant data, and ensure their screening practices are both transparent and consistent. KYT helps support these requirements by creating a standardized, data-driven verification process that reduces subjectivity and improves accuracy.

For platforms serving property managers, KYT also offers a competitive advantage. It creates a faster, safer tenant onboarding experience that reduces operational risk while helping renters move in sooner.

The core elements of KYT

KYT brings clarity and consistency to the tenant verification process by relying on verified data rather than manual document review. While every property manager’s workflow looks a little different, effective KYT programs typically include four core components:

Identity verification (IDV)

Identity verification ensures the applicant is who they claim to be. Modern IDV tools verify identity data against trusted databases, detect altered or synthetic identities, and employ liveness checks to confirm the person behind the application is genuine. This step also helps reduce fraud tied to AI-generated documents and impersonation attempts.

Income and employment verification

Verified income data gives property managers confidence that an applicant can reliably pay rent. Instead of relying on documents that may be outdated or forged, KYT uses payroll and bank data to confirm income sources, employment status, and deposit patterns in real-time. This creates a clearer picture of an applicant’s financial stability.

Proof of funds and assets

Beyond monthly income, many property managers need to verify that applicants have sufficient funds on hand to cover security deposits, the first month’s rent, and move-in fees. KYT can analyze real account balances and asset information, which helps teams quickly confirm whether applicants meet those requirements, often without additional paperwork.

Behavioral and fraud signals

High-quality KYT solutions also detect irregularities across the application. In addition to standard background checks, KYT also flags mismatched account data, suspicious account activity, repeated document uploads, or anomalies tied to device behavior. These signals help property managers identify applications that warrant closer review and reduce the risk of approving high-risk tenants.

KYT vs. traditional tenant screening

Traditional tenant screening relies heavily on manual document review, credit checks, and phone-based verification. Today, nearly every step of the traditional process can be faked with generative AI. KYT offers a faster, more reliable alternative by using verified identity and financial data directly from trusted sources that can’t be faked. 

Below is a simplified comparison of the two approaches:

Traditional screening:

• Review pay stubs, tax returns, and IDs manually

• Wait several days for verification

• Limited visibility into real-time income and account activity

• Higher risk of forged documents or incomplete data

• Friction for both applicants and leasing teams

KYT-enabled screening:

• Verify tenant identity, income, and assets instantly

• Use direct bank and payroll connections for accurate data

• Automatically identify fraud patterns

• Reduce human error and subjectivity

• Approve the right tenants faster while improving compliance

Faster verification also means fewer vacant days, lower risk, and a more streamlined experience for applicants.

How Plaid enables KYT

Plaid helps property managers conduct critical points of the KYT process, verifying tenants quickly and accurately. Instead of relying on manual review or documents that can be altered, Plaid connects directly to bank-verified financial and identity data so leasing teams can make confident decisions in less time.

Identity verification

Plaid helps property managers confirm that applicants are who they say they are. It verifies identity information, validates government IDs, checks for liveness, and flags potential synthetic identities or mismatched information. This reduces the risk of onboarding fraudulent applicants or approving leases based on manipulated documents.

Income verification

Plaid pulls bank-verified payroll and account data so property managers can confirm income, employment, and deposit history in real time. That eliminates the guesswork of reviewing paper pay stubs or tax forms and helps teams verify an applicant’s ability to consistently pay rent.

Account verification

Plaid helps applicants securely connect their bank accounts during onboarding. This allows leasing teams to confirm account ownership, verify key details such as routing and account numbers, and streamline ACH setup for application fees, deposits, and recurring rent payments.

Fraud prevention and risk insights

With Plaid, property managers and platforms can detect anomalies, repeat attempts, unusual identity patterns, and other indicators of rental fraud. These patterns help teams identify higher-risk applications early in the process, reducing downstream loss and eviction-related costs.

Plaid’s tenant screening tools enable a faster, more standardized KYT process. Property managers can approve qualified applicants on the spot, reduce vacancy time, and create a smoother experience for renters while limiting risk. 

The future of KYT

As AI-driven fraud continues to increase, property managers need better tools and processes to keep up and avoid losses with KYT. At the same time, introducing new KYT measures is an opportunity to update applicant processes and offer fast, mobile-first leasing experiences.  

Together, open banking, digital identity verification, and modern compliance frameworks are helping make this possible. Verified financial data, automated ID checks, and real-time fraud signals provide property managers with a more comprehensive view of each applicant, reducing approval times and lowering the risk of onboarding fraudsters or people misrepresenting their identity or income.

Plaid helps make the transition to digital leading easier. Learn how plaid can help you build a fast and accurate KYT process.