Finding the right renters for your house or apartment can be difficult. A bad tenant can cause months of headaches, among other issues. For that reason, many landlords have turned to background checks as a first step to screening potential renters.
What background checks do landlords typically run?
- Consumer credit report
- Eviction report
- SSN trace and address history
- Employment verification
- Criminal history report
Landlords who decide to implement a background screening process for potential tenants, or engage the services of a third party to do it for them, will immediately discover an assortment of challenging and involved statutes, laws, and regulations. The Fair Credit Reporting Act (FCRA) is an essential part of any background check program, and it’s crucial for you to understand how it applies to your situation.
What is the FCRA?
The FCRA is a federal law that governs the collection, assembly, and use of consumer information. It provides the framework for the credit reporting system in the United States, including consumer credit information. FCRA regulates the practices of Consumer Reporting Agencies that collect and compile consumer information into reports for use by credit grantors, insurance companies, employers, landlords, and other entities who make eligibility decisions affecting consumers.
The FCRA regulates landlords in the following manner:
- FCRA sets rules for what information landlords can gather and rules for how gathered information can be used, i.e., the extent to which property owners can use background check results in making tenancy decisions.
- Many states also restrict what criminal background and credit information landlords may obtain and/or use.
- Landlords who utilize CRAs to procure criminal background reports must take specific “pre-procurement” steps.
10 FCRA Best Practices
- Provide notice to the subject that a criminal background check may be obtained for tenancy purposes.
- Obtain authorization from the subject of the criminal background report.
- Make this notice a stand-alone document.
- If a criminal background report contains negative information which “in whole or in part” may cause you to take any adverse action, including rejecting that candidate for tenancy, you must provide the applicant a pre-decision letter, a copy of the background check report, and the FCRA Summary of Rights.
- Give the applicant sufficient time to obtain /dispute/ clarify the background check report before making a final decision.
- After the appropriate waiting period (4-5 business days) has passed, if you decide to take adverse action, provide notice of such adverse action to the subject of the background check. Although notice may be provided orally, the more prudent route is to use written or electronic notification.
- Move away from broad, across-the-board criminal background exclusions.
- Refine general exclusion standards to apply to the actual positions sought.
- Use individualized assessments when considering applicants with criminal records.
- Consider state law restrictions on obtaining and using criminal background information.
SELECTiON.COM® provides the comprehensive and customizable screening solutions needed to navigate the legal aspects of background screening. We stay up-to-date with all EEOC and FCRA regulations and provide you with all of the forms you need on our proprietary system, Fastrax®. Our system allows property owners to stay compliant and provides clients with the ability to follow the background check process from start to finish. In addition, our Applicant Entry system will obtain accurate information straight from the applicant, as well as an electronic release form.
Contact us today to see how SELECTiON.COM® can take your tenant background check process to the next level.
NOTE: The contents of this article are not legal advice for your particular situation. You should neither act nor rely upon anything stated in this article without first consulting your own legal counsel.