As a landlord, it’s important to familiarize yourself with the basic requirements of the Fair Credit Reporting Act. We strongly recommend that you check an applicant’s credit report during the screening process. You should have certain credit standards that all applicants need to meet before you approve them to move into your property. Just make sure you comply with the Fair Credit Reporting Act when you do that credit check. There are two specific steps you should take.
Always tell the applicant that you will request a consumer credit report as part of the application procedure. Make sure the applicant signs an authorization for you to perform that credit check. When you get the acknowledgement and the authorization in writing, it helps you to document the entire process.
If an application is rejected because the credit standards do not meet your requirements, you have to notify them in writing. Let them know they have a right to obtain a copy of their credit report, and provide them with the name and address of the credit bureau you used.
The way you inform a rejected applicant is important and must be legally compliant. At Cape Shore Property Management, we have a standard letter that we use when we have to reject a tenant. We do this all the time. When you write your rejection letter, make sure it includes the necessary information, including the name, address and phone number of the credit bureau. You want to let the applicant know that he or she can request a credit report from that agency within 60 days. Rejected applicants also have the right to dispute the accuracy of the report. This is provided in Section 1681 of the Fair Credit Reporting Act.
Understanding the Fair Credit Reporting Act and utilizing it each time you have an applicant and you need to check credit will help you reduce vacancies and it will ensure you have fewer headaches when you are trying to screen tenants and find the most highly qualified renters.
As we said, this is part of our daily practice as professional property managers. If you need any help understanding the Fair Credit Reporting Act, or you’re not sure how to properly reject a tenant based on credit, contact us at Cape Shore Property Management, and we would be happy to help you.