American Dream Title &
Background Checks Services, LLC
FAQ
What is the FCRA?
The FCRA is the federal Fair Credit Reporting Act, which is the governing act applicable to Consumer Reporting Agencies (CRA) and consumer reports, including background checks. The FCRA stipulates that certain procedures be followed in order to preserve the rights and privacy of applicants. Violations of this act may create substantial legal ramifications.
What does the Fair Credit Reporting Act have to do with a criminal search?
The FCRA governs all background searches, not just credit reports. The Act defines permissible purposes, how the information is handled, what procedures and documentation must be followed, and even defines the procedures for when an applicant is denied tenancy based on the results. There is a great deal more to know about the FCRA, and we recommend all HR personnel be aware of the impact this act has on your tenant screening decisions. The full text is available on our website.
Do I require written consent from the applicant to run a credit check?
Yes, you must have the written consent of the applicant to obtain a copy of their credit file.
Most rental application forms have the consent clause just above the signature on the last page. What is considered an “adverse action” in tenant screening?
Common examples of adverse action against a residential applicant are:
- Denying the application;
- Requiring a co-signer on the lease;
- Requiring a deposit that would not be required for another applicant;
- Requiring a larger deposit than might be required for another applicant; and
- Raising the rent to a higher amount than for another applicant.
If I take adverse action against an applicant, do I have an obligation to that individual?
It all depends on why you are not leasing to them. If the background search revealed information that caused the adverse action in whole or in part, then you are required by the FCRA to notify them in writing of your intent not to approve their application. You must also provide them with additional information stipulated in the FCRA. See our Tenant Screening FCRA Compliance (tenant-fcra.asp) page for more detailed information.