The Fair Credit Reporting Act
What Landlords Need to Know
When screening potential tenants, keep in mind that landlords are required to comply to the Fair Credit Reporting Act (FCRA), which was enacted by Congress way back in 1970. The law was intended to protect consumers by ensuring that information in their credit reports is accurate.
Consumer reports are used every day by landlords to verify employment, rental history, and to determine credit worthiness. When landlords use these reports to reject a tenant’s application or take another adverse action, a notice to the applicant is required. (Other adverse action might be requiring a co-signer, a larger security deposit than other tenant’s pay, or raising the rent.)
The notice required by the FCRA must include the name, phone number and address of the Consumer Reporting Agency (CRA) that supplied the report. It must also include a toll-free phone number for CRAs.
Additionally, the notice must contain a statement that the CRA did not make the decision for the adverse action, as well as a notice of the applicant’s right to dispute the accuracy of the report and to obtain a free credit report within 60 days.
Landlords who deny a potential tenant’s application for reasons other than an unfavorable consumer report are still required to give the adverse action notice in certain cases. For example, if the applicant has a previous bankruptcy, but the main reason for denial was a bad reference from a previous landlord, they must still receive the notice because the bankruptcy was a minor factor in the decision.
Non-compliance with the FCRA can lead to serious consequences; study the law and be sure that you are within its requirements.