By Jon Randolf
The Fair Credit Reporting Act of 1970 is established to guard the rights of a consumer. It states that the consumers have a right to know the information present in their credit reports. This information is especially necessary when it results in adverse actions against them. If this information is imprecise or flawed the consumers have the right to change it.
How does this Act affect you as a landlord?
A full disclosure is necessary if the information in someone’s credit report compels you to take negative actions against them. Following are the few examples of this kind of negative actions:
- Requiring a co-signer or guarantor on the lease
- The consumer may be rejected of housing
- A deposit which might not be required from any other applicant
- A bigger deposit as compared to another tenant
- Raising the rent to a greater amount
Since this leads to differentiation between the regular and faulty tenants, the tenants deserve the right to full information regarding this.
Once you have decided to take action against a tenant due to any unfavorable information in their background report, it is extremely important to give a written letter disclosing the reason for your actions even if it is not the primary reason for it. This letter states that the tenant’s credit report is responsible for your action. You can always inform the consumer over the phone but it’s a better way to provide the information through a letter since it makes it official and leaves no scope for misunderstandings.
Consumer’s right to agency details
The contact details of the agency that provided you with the report, their name, address and phone number and is the chief source of information must be provided to the consumer. It must also be clarified that the agency has no role in the decision making process and cannot give a reason for the unfavorable reaction. The consumers should be aware about the fact that they have the right to question the accuracy or fullness of the information stated in the report. The agency has to provide full credit report within 60 days on consumer’s request. This is one of the most important tips for landlord tenant screening.
What happens when one does not obey the Fair Credit Reporting Act?
As mentioned earlier this act was devised to protect the rights of consumer. The individuals can sue the landlords in federal court. If a person successfully sues the landlord, he or she is entitled to compensation and recover court costs and legal fees. The law supports the individuals to seek penalizing damages for intentional violation of Fair Credit Reporting Act. The FTC (Federal Trade Commission), other federal agencies & the states may sue landlords for breaking the rules and get civil punishment. Because of these reasons it’s extremely important to comply. This brings to an end our short video on the FCRA. It is recommended to further conduct a research on the law and speak to a legal expert like a lawyer as this video is non-comprehensive and exclusively for your reference.
Jon Randolf is Background Screening and Due Diligence Industry Professional with 17 years of experience.
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