By Mary Gallagher
A credit check is one of the several key steps a landlord goes through to improve the likelihood the tenants he selects will pay the rent. Whether or not he chooses to do a credit check is up to him. It is not required by law; rather, it is a good business practice. Selecting only one or several of all prospective tenants for a credit check, however, is problematic for a landlord, on several counts.
What’s Fair?
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The Federal Fair Housing Act prohibits discrimination in any aspect of housing based on race, color, national origin, religion, sex, familial status and handicap. The prototype example of a Fair Housing violation is a landlord refusing to rent to a tenant because of her race or religion. But landlords know the application of the Fair Housing Act runs far and wide. If a landlord runs credit only on a husband for a husband and wife who want to rent an apartment, she risks being charged with a violation of the Fair Housing Act — for selecting the male instead of both the male and the female for the check; or, similarly, the violation could perhaps be for requiring a Hispanic to submit to a check but not a Caucasian, if the husband and wife are of different races and/or ethnicities.
What If One Tenant Moves?
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If divorce affects half the married population, you can bet it will affect about the same percentage of married tenants. If a landlord accepts a married couple, one with bad credit and one with good, and then the couple gets divorced, the landlord has a 50 percent chance of ending up with a single tenant with bad credit. This is one primary reason the landlord does a credit check on every applicant for every unit. He understands roommates as well as life mates move out all the time. He wants everybody on the lease to meet the same minimum standards for credit.
Can the Landlord Make Exceptions to Credit Requirements?
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Because of the requirements of the Fair Housing Act, if a landlord opts to check only one tenant’s credit on a multiple-tenant lease, she had better have a good reason. One reason might be that one of the tenants just moved to this country and has no Social Security or tax identification number. The other tenant having poor credit is an unlikely exception; the landlord will especially want to see that credit report. She can agree to make an exception to her minimum credit standards once she sees the reports, but she should also have a documented policy and practice for this event. She might ask for a larger deposit or a co-signer who will remain financially responsible for the rent if the tenant with good credit moves out. The landlord does, of course, retain the right to deny tenancy based on a poor credit report from one of two or more tenants applying for tenancy together.
What Rules Must the Landlord Follow?
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There are no legally prescribed rules a landlord must follow in setting his minimum standards for credit in determining eligibility for tenancy. And, he doesn’t have to tell you what standard he applied. However, if he is challenged through the filing of a complaint through the Fair Housing Act, he must be prepared to prove and document he did not base his decision on any of the classes protected from discrimination. Additionally, if his reasons for denying tenancy included credit, the Fair Credit Reporting Act requires him to disclose this fact, identify the credit reporting agency with its address and phone number and include a statement advising the applicant she can receive a free copy of her report from the agency within 60 days from the statement.
Source : ehow
