Q: I was turned down for an apartment after the landlord ran my rental application, since I had bounced a check last year. How did they know? What else can they find out?
A: Welcome to the 21st century of data retrieval. With the evolving use of the Internet to retrieve a variety of information, landlords can find out a host of personal data. How did they know about yours? By using one or more screening services available to most landlords through various apartment owner associations.
According to John Galbraith, communications director for the California Apartment Association (CAA), “Fair housing practices start with the application process,” Galbraith explains. The CAA recommends landlords screen all applicants equally and offers members a host of resident screening services.
What kinds of facts are available for a landlord to check? A virtual cornucopia of options exists today. Choices range from the basic “just credit” to a complete data search designed to uncover past evictions, criminal convictions or court actions, job status and even social security number abuse.
Landlords usually obtain a basic credit and eviction report by calling their member-reporting agency. Before the information is shared, a password and confirmation of proper use is required. Within 10 minutes, a faxed copy of the report is usually in the hands of the requesting party.
Traditionally, “just credit” and “evictions” were the most common searches that landlords utilized. A standard credit report includes a listing of all open and closed credit lines, including credit cards, loans and incurred debt. Accounts are listed as “open,” “closed” or “inactive.” If the account was closed at the lender’s request, a notation is included.
Inquiries by other interested parties are also listed on the report. For example, if the applicant has applied for several credit cards, the name of the company and date of credit request is listed on the credit report. Seeking multiple rentals at once can also be found at a glance.
The “profile summary,” usually found on the first page of the report, can reveal at a glance key credit items. Evictions, past due amounts, current and past delinquent accounts and total monies owed by the applicant are listed.
When landlords decide to use a more advanced tenant screening service, they are likely to get information ranging from character references, reputation, community standing, involvement in civil cases and criminal convictions. Because this is sensitive information–and to give applicants a chance to opt out of the application process–landlords must notify applicants of their intent to order such screening. Notification details and rules are detailed in the Fair Credit Reporting Act, which is available online through the Federal Trade Commission (www.ftc.gov).
Janet Portman, attorney and co-author of Nolo’s “California Landlord’s Lawbook,” says: “The worth of the background checks is highly debatable. Many small courts do not post their information on the national databases used by the screening service, and the databases themselves may contain inaccurate or outdated information.”
What keeps a landlord from abusing the ability to extract personal information about an applicant? Most screening services require the landlord to sign a “user agreement” before granting credit check privileges. As required by the federal Fair Credit Reporting Act, the user agrees to a multitude of promises, including how to respond to a rejected applicant based on credit or eviction information. If rejected due to a basic credit run, the law requires, in part, that the applicant advised in writing:
1.) That the rejection was based, in whole or in part, on the information contained in the credit report.
2.) That the applicant may obtain a free copy of the report from the agencies identified in the notice within 60 days of the rejection, and the applicant can dispute the accuracy of the information by contacting the credit reporting agencies, which are to be provided to the consumer as well.
Rejections based on the more advanced type of screening are more complicated, and are detailed in the Fair Credit Reporting Act.
The landlord also agrees to comply with all provisions of the fair credit reporting act, and notes that a possible fine of $5,000 or up to two years in prison (or both) can be imposed if the user obtains the report under false pretenses. Credit reports can only be used for legitimate business purposes.
Keep in mind that applying for a rental today is serious business, both for the landlord and tenant. By respecting the law and the rules, everyone involved should be well informed and reap the benefits data retrieval can provide.
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