The Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is a United States federal law that regulates the collection, dissemination, and use of consumer information, including consumer credit information. Along with the Fair Debt Collection Practices Act (FDCPA), it forms the base of consumer credit rights in the United States. It was originally passed in 1970 and is enforced by the U.S. Federal Trade Commission and private litigants.

Why does this act apply to Landlord’s & Property Managers?

As Landlord’s and Property Managers, we obtain sensitive information about prospects(Individuals that apply for a rental property a landlord owns or a property manager manages).

Federal laws guide us on how we can use that information and whom we can share it with.

Sensitive Information Received from a Background Check:

• Credit Score
• Credit Application History
• Collections, outstanding Judgements, or Liens
• Past Addresses
• Criminal Information
• Eviction History & More

What are the three big Consumer Reporting Agencies?

• Experian
• TransUnion
• Equifax

Adverse Action Letter

Landlord’s and/or Property Managers must send out an Adverse Action Letter to the consumer when adverse action is taken based on the reports and must identify the company that provided the report so that the accuracy and completeness of the report may be verified or contested by the consumer(Applicant).

The Adverse Action Letter must outline the reason for denial and where they may obtain a copy of their free credit report.

Terms of Denial:

• Information obtained from Credit Report
• Information obtained from Criminal Report
• Information obtained from Co-Applicants Report
• Conditional approval – New Terms & Conditions

Summary

FCRA regulates the collection, dissemination, and use of consumer information.

How it Applied to Landlord’s & Property Managers:

• Landlord’s & Property Managers are responsible for keeping the information obtained via a credit report private.
• Never send the report to anyone, not the Owner of the property(If you’re a property manager) or the Applicant themselves.
• Only discuss generalities with the Applicant. Never give specific details.
• You may not disclose information about a spouse to their significant other.
• You may disclose that there is an issue with the co-applicant but you may never tell them what.

Adverse Action Letter:

• An Adverse Action Letter must be sent to the applicant if denied or conditional approval necessary.