The first thing a landlord should do is to properly restrict access to and prevent wrongful disclosure of a tenant screening report. This is because credit and consumer reports can only be issued to persons/companies who have a permissible purpose for obtaining them. So, a landlord cannot disclose or distribute the background screening report to anyone other than individuals within their own organization having a legitimate business need to know. This means the consumer reports should be kept in a secure location, access to them limited to those with a legitimate and proper business need to know, and disclosure limited properly.
The second thing a landlord should do is to understand his or her obligations when it comes to making a decision that is adverse to the tenant based in whole or in part on the consumer report they obtain from the credit reporting agency or from some other third party source. “Adverse action” against a tenant is defined broadly in the FCRA, which you can read here.
This law means the landlord is obligated to provide notice of the adverse decision to the prospective or current tenant, and to reference the fact that the decision was based in part or in whole on a consumer report supplied to the landlord. This notice should be issued with every adverse decision made.
Landlords should keep documentation of notices being mailed, the date on which it was put into the mail and to what address it is mailed should be recorded. Electronic mailing of this notice may be authorized in accordance with the federal E-Sign Act, and its state law equivalents.
In summary, landlords must abide by the FCRA when they request credit reports and other consumer reports from a third party company relating to any prospective or current tenant or co-applicant. Landlords should obtain written authorization to obtain this information from the tenant and their co-applicants to best protect the landlord and have a written policy describing when they will obtain updated information about a current tenant or co-applicant. Landlords must also adhere to the requirements of the FCRA if they make any adverse decision or impose any additional burdens on the prospective or current tenant.
Want more information on how to comply with the FCRA, or more tips on screening your tenants? Watch our full webinar “Residential Screening – What Every Landlord Should Know.”
