Landlords sometimes obtain consumer reports from consumer reporting agencies (CRAs) to evaluate rental applications. Such reports include:

(1) credit reports from credit bureaus, such as Equifax, Experian, and Trans Union;

(2) reports from tenant-screening services that describe rental histories of applicants; and

(3) reports from reference-checking services.

When a landlord obtains a consumer report from a CRA for the purpose of evaluating a rental application, the landlord must comply with the Fair Credit Reporting Act.

Adverse Action

A landlord must meet the requirements of the Act when taking "adverse action" against an applicant. Adverse actions include:

(1) denying an application;

(2) requiring a co-signer for a lease;

(3) requiring a deposit that would not be required for another applicant;

(4) requiring a larger deposit than would be required for another applicant; and

(5) raising the rent to a higher amount than would be required for another applicant.

Adverse Action Notice

When a landlord takes adverse action against an applicant, and the adverse action is based solely or partly on a consumer report, the landlord must provide the applicant with an oral or written "adverse action notice." The notice is required even if the information in the consumer report was not the main reason for the adverse action. The notice must include:

(1) the name, address, and telephone number of the CRA that furnished the consumer report;

(2) a statement that the CRA did not make the decision to take the adverse action and cannot give specific reasons for it; and

(3) a notice of the applicant's right to dispute the accuracy or completeness of any information in the consumer report and his right to obtain a free copy of the report from the CRA upon request within 60 days.

Violations of the Act

Applicants may sue landlords for violations of the Act. Such applicants may recover damages, court costs, and attorney fees. Punitive damages may be recovered for deliberate violations of the Act.

Copyright 2010 LexisNexis, a division of Reed Elsevier Inc.