Today, the United States Department of Housing and Urban Development, the Federal Housing Finance Agency, and the United States Department of Agriculture are reminding landlords of their obligation to inform tenants and prospective tenants of their rights. When landlords use information from a consumer report, like a rental background check, against a tenant, the Fair Credit Reporting Act requires landlords to tell the tenant of their decision and how the tenant can contact the company that created the background check. This obligation, known as the adverse action notice requirement, applies to any action against a tenant based on information from the background check, including denying a rental application, increasing the rent charged or security deposit, or requiring a co-signer. As the agencies state, providing this information in writing is the best way to ensure that tenants get the information they need, and for landlords to demonstrate they are meeting their legal obligations.
Renters have the right to review their rental background check report and dispute any information they believe might be inaccurate. But if tenants and prospective tenants aren’t told about the background check report and how to contact the company that created it, they can’t get inaccurate information corrected. When landlords fail to provide prospective tenants with the legally required notice, they violate the Fair Credit Reporting Act and may subject themselves to legal liability. Landlords are ultimately responsible for ensuring that tenants get the information they need.
Background checks, particularly ones containing outdated, misleading, or inaccurate information, can make it difficult for people to find housing and can also increase their housing search costs. In response to a recent request for information, renters told the Federal Trade Commission and the CFPB that they were denied repeatedly when applying for rental housing, sometimes without explanation. Renters also reported that there isn’t a consistent process by which they find out that their rental application was denied, or that they’ll have to pay more in rent. Some renters reported landlords failing to tell them altogether that they’d been denied for housing until they reached out. Similarly, in complaints submitted to the CFPB, tenants and prospective tenants tell the CFPB that they do not always get the legally required information about the background check from landlords or property managers.
The Fair Credit Reporting Act requires companies that create rental background check reports to investigate and respond to disputes generally within certain timeframes. Nonetheless, some renters have indicated the dispute process can take years to fully resolve an error. In complaints submitted to the CFPB, renters express frustration and even hopelessness about how difficult it can be to successfully dispute errors on rental background checks.
What renters can do
There are a few things renters can do after they are denied housing or asked to pay more for their housing:
- Within 60 days of a landlord denying an application for rental housing or taking another action against a tenant based on information contained in a background check report, you have the right to obtain a free copy of the report from the company that compiled it. You can review your report for inaccurate or incomplete information.
- You have the right to dispute any errors in the report and are typically entitled to results from a dispute investigation in 30 days.
- If you have a problem with tenant screening or other credit reporting, you can submit a complaint to the CFPB.
Other work in this area
- The CFPB has taken a number of steps already to address issues caused by inaccurate data in tenant screening reports ( and ).
- Learn more from CFPB’s reports on tenant background checks: a and a .
- Read more information from the FTC about .