Looking for a way to get a full credit report done on your potential tenant?
Good luck. What used to be common practice has now become impossible due to new, stricter Federal Credit Bureau regulations. In order to obtain credit information a landlord or any person seeking the information must have what the FCRA calls “permissible purpose” meaning verification for employment, loans, legal and business uses. Seems pretty simple, right?
Here is where tenant credit reports get difficult
Renting a home might appear to be legitimate or “permissible purpose” for needing someone’s credit information. But as an individual landlord passing a bureau premises inspection and meeting the FCRA requirements to become ‘certified’ to run credit reports is beyond your reach. Large corporations, big businesses, banks, credit lenders, property management firms, insurance companies, screening companies and legal practices go through rigorous audits in order to be granted the permission to obtain credit information on employees and clients.
To give you a fair assessment of the process– here are the most common things a bureau is instructed to look for upon granting ‘certification.’
- A separate entrance/exit for your business with appropriate locks and security. This still applies to home offices.
- Locking filing cabinets with secured use.
- Business listing in the published phone book including a specific business line. This still applies to home offices and excludes cell phones you also use for personal reasons.
- A working shredder properly emptied on a regular basis.
- Maintenance and storage documents for the appropriate amount of time and disposal of documents in appropriate way.
- Care and keeping of documents acknowledging the clients’ permission to run the report. In other words you have to prove you are running credit reports on those who know you are doing so.
- Submitting to random and scheduled audits to ensure compliance of FCRA standards and best practices.
- The cost of the audits varies and is the responsibility of the landlord.
There are other factors playing into certification and each bureau has a slightly different process for determining your qualifications but more often than not individual landlords don’t make the cut.
Specific rules on tenant credit reports
You do not have the option to use the information provided in the rental application to run reports on web-based sites such as freecreditreport.com and the like– despite what other landlords and how-to sites might say. Unfortunately, this information is not always accurate nor is it secure. And even with informed consent, impersonating your potential tenant to obtain their credit report is illegal. Additionally, if you choose to use a credit report to determine an applicant’s eligibility to rent your home there are very specific rules regarding how you must notify them of their “adverse admission” or rejected application. A verbal “no” is not always good enough.
Don’t think using a screening company or a property manager changes the requirements to obtain the credit score or full report. They can provide you with a yes or no answer regarding a credit range you pre-determine and provide them. Just because they are certified to run and view a credit report doesn’t mean you are.
And truth be told, information more important than what is contained in a full credit report can be found elsewhere. If you run thorough screening on your tenant and take the time to have them fully investigated you will know about past evictions or poor tenant history. You will be provided complete criminal history. What’s more, you have the right to ask your potential tenant for proof of employment, copies of loan/credit card payment receipts or utility statements. If you still want the full report ask them to provide it to you in their rental application. A good potential tenant should be up front with you about their criminal and financial past.
ARPOLA provides members with investigative tenant screening–the most thorough screening available!