FCRA Tenant Screening: The Only Background Check Landlords Need

So you decided to search the internet for tenant screening services and you came across a term you’ve never seen before: FCRA tenant screening.

As you continued your research you realized that very few tenant screening websites actually mention FCRA compliance at all. This confused you because you were under the impression that all tenant screening and background check providers were FCRA compliant, and that you were doing “what you’re supposed to.”

You couldn’t be  further from the truth.

Most Tenant Screening Companies are Robots

The fact is that most tenant screening companies are simply only providing database information generated by their search “robots”. If you’re unsure exactly what your tenant screening provider is doing, then you should prepare for problems immediately.

The Fair Credit Reporting Act, better known as the FCRA, is the guidelines that govern what information can be used in the decision making process for renting to a possible tenant. With the rental market at an all-time high, landlords need to know these laws, or have a tenant screening company that has certified FCRA Certified Background Screeners compiling, reviewing, and completing their reports.

How to Tell if You’re Using a FCRA Tenant Screening Company

One thing you will never hear most tenant screening companies tell you is where they get their data and information from. Well since I’m all about transparency, I’ll let the cat out of the bag: Most, if not all, tenant screening companies (and even pre-employment screening companies) get all of their information from the same databases and sources.

So you’re probably thinking what separates one company from the next. Well, that is where FCRA tenant screening comes in to play. Most  background check providers will instantly generate these reports and hand them back to their clients.

There is a lot wrong with this scenario:

  1. What if you typed in the wrong SSN or name? Who’s report did you just run, better yet pay for?
  2. What if the records on the report aren’t legally reportable? Do you know the FCRA laws for every state to make the decision?
  3. What if you denied an applicant for information that wasn’t even his or hers? Are you ready to take on a lawsuit?
  4. The company simply IS NOT a real tenant screening company, period.

The best way to find a FCRA tenant screening company is to simply check out the company’s report completion process. Since most companies don’t disclose that information anyways, the second best way is to look at their completion times. If they claim their reports are instant, that’s already a red flag. However, most good tenant background check services will offer some sort of FCRA interpretation on their instant reports.

You’re Better Off Not Getting a Background Check at All

The days of saying “It’s my property. I say who stays here or not!” are over.

Most landlords feel that way, and they have every right to. While this may be true to an extent, the reality is that you really don’t have as much power as you might think.

Advocacy groups like H.O.M.E. (Housing Opportunities Made Equal) help enforce discrimination and tenancy laws. This organization will sometimes send fake applicants to properties to see if the landlord will discriminate against, or decline them for something outside the laws of the FCRA.

The simple truth: if you’re not willing to take the time to learn and abide by the FCRA, you might as well not use background checks in your rental application process.

FCRA Tenant Screening Non-Compliance Penalties

The FCRA allows applicants to sue landlords for damages in federal court. If they win, you will most likely be responsible for all court costs and legal fees. If they can prove that you deliberately violated the FCRA, they can also seek punitive damages as well.

The Federal Trade Commission (FTC), along with the State, can sue you for not complying with the FCRA and can even be awarded civil penalties. This can all be avoided if you, the landlord, can prove that you maintained reasonable procedures to assure FCRA compliance.

Using a FCRA tenant screening company to review and interpret background check reports is the first step, but it’s the biggest one you can take.

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