Landlords often use things like consumer credit reports in order to evaluate a tenant’s ability to pay for a rental property or commercial property for that matter. However, it is important to realize that there are some things that must be done by the book in order to obtain and use specific information about a tenant. The Fair Credit Reporting Act makes it very clear that a tenant must be notified and must sign a consent form before any of his/her background information can be accessed and used in a decision making process. This does not mean that anyone at any time cannot get the information but if it is used, the landlord had better be able to show that protocol was followed properly.

Adverse Action Notice

What is this? It certainly doesn’t sound very good. It is quite simple actually. If a landlord uses the FCRA accordingly and obtains information that he/she deems undesirable in terms of leasing or renting his/her property out to said tenant, the landlord is required by law to notify the tenant as to why the decision was made. Adverse action is that of denying a rental application, asking for someone else to co-sign on the lease, requiring a much larger deposit than originally discussed or a number of other things. Full disclosure about the origins of the information which was used against the tenant must be practiced. This means if the report from Equifax is what prompted the landlord to make the decision to take adverse action, this information must be provided to the tenant in writing. These are all things to take into consideration in regards to credit checks for tenants.

Where to Get Credit Reports for Landlords

If you are a landlord and you are planning to get credit reports for landlords then there are a number of ways you can go about doing this. First, you can ask your tenant to request his/her recent credit report and provide it. Another option is to have your tenant sign a consent form or credit application for you and then use an online credit reporting service to get the credit check for landlord. There are a number of agencies which provide these services and more, including criminal background checks and public records searches. Most of the time there will be a monthly fee attached to using these services but if you are a landlord chances are you will utilize the services more than once and it will be worth the money.

Also remember that a credit report does not always depict a prospective tenant accurately. You may get a tenant who has an excellent credit score but then trashes your property. At the same time you may get a tenant who has a less than desirable credit report but winds up being the best tenant ever. It is tough to be a landlord but always use your gut and check everything, not just credit scores.