Screening tenants? Check out the FTC’s new guidance

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Using background checks to screen tenants? Or maybe your company provides those background checks to landlords? Make sure you’re complying with the Fair Credit Reporting Act (FCRA). The FTC’s new guidance for landlords and for tenant background screening companies can help.

What do landlords need to know?

Landlords must take certain steps before getting a consumer report and after taking an adverse action based on the report. A consumer report can include a credit report, a rental history report or a criminal history report. Landlords can only get consumer reports if they have a “permissible purpose,” like tenant screening. Before you get a consumer report, you must certify to the company providing the report that you’ll use the report only for housing purposes.

If you, as a landlord, take an adverse action against a tenant or rental applicant, then you must give notice – orally, in writing or electronically. An adverse action could include denying a lease, requiring a co-signor, or requiring higher rent than for another applicant. The FTC’s guidance has more examples of when an adverse action notice is required. When you send an adverse action notice, it must include the contact information for the company who supplied the report and an explanation of the right to dispute the report.  

What should tenant background screening companies keep in mind?

Even if you don’t think of your company as a consumer reporting agency, it may be one if it provides information about people to landlords for use in housing decisions. Background screening reports provided by your company are covered by the FCRA if they’re used to help decide eligibility for housing and include information “bearing on a consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.”

If your tenant background screening company is covered by the FCRA, then you have four main requirements:

  • Follow reasonable procedures to ensure accuracy.
  • Get certifications from your clients.
  • Provide your clients with information about the FCRA.
  • Honor the rights of applicants and tenants.

The new guidance includes details about each of these requirements, as well as a handy chart of key FCRA provisions.

Whether you’re a landlord or a screening company, when you’re done using a consumer report, you must securely dispose of it. For more information, read Disposing of Consumer Report Information? Rule Tells How.

Share these resources – and the FTC’s Credit Reporting and Human Resources portals – with others in your company.

 

Comments

I think that any background checks be limited to only housing history, a landlord only needs to see if the tenant has paid rent and is a good tenant, a landlord or property owner does not need to know any other history of the tenant as housing discrimination can occur and does occur.

I have personally seen how too much information is not handled properly or the recipient of the information(landlord) does not have the experience to make a sound impartial judgement on the information provided.

Information used for screenings are too often used to discriminate, this is why we value our privacy from the masses.

Screen your Land-Lord! he may very well be a Registered-Sex Offender.

No one can stop the landlord's means of discovery. Rules don't seem to apply. I want to buy a house. But because of the twenty five credit checks I have no credit. I never checked my credit. But loan officers did and they said I have no score. I thank you for the information. All seemed to coincide with my phone being hacked during the election.

We are a homeowners association in North Lauderdale, Broward County Fl.

We use consumer and investigation reports to determine eligibility of new unit owners and tenants.

Presently we do not comply with the FCRA , adverse action notices. Requirements. Nor have we ever disclosed our minimum standards for eligibility to prospective applicants.

Does this mean that we are in non compliance and may be subject to civil liability?

Please help.

The short answer is yes, you are totally out of compliance and may be subject to fines, penalties and lawsuits.. The way you posed your question indicates you are well aware of that. If you are obtaining your consumer reports from a Consumer Reporting Agency, then I suggest you look for a new company which does a better job of keeping you informed on your legal responsibilities.

Do you have link to the chart of FCRA provisions that you mentioned? Thanks.

If I want rent a one bed room apartment in NY queens landlord asked annual $ 60000.00 Income. This is totally unacceptable, if I have that much money I will bought a house.in future no one will not get a apartment .

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