Do you run background checks to on your tenants? Make sure you’re complying with the Fair Credit Reporting Act (FCRA). The FTC’s 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.

If you have further questions, contact your Essential Screens professional.

Source: Federal Trade Commission: Screening tenants? Check out the FTC’s new guidance