Preface to article: Read the article and the comments below by Marv Steier
The process of finding the perfect rental house or apartment can range from hectic to nearly impossible. But it could be worse: Picture yourself locating that long sought-after apartment or town house only to be rejected by your prospective landlord because of a negative report from a company you've never heard of.
Sound like a nightmare? Unfortunately, for many Americans it's all too real.
Of the approximately 37 million rental units in the U.S., 17 million are overseen by professional property managers. Many landlords, especially those who supervise large multifamily apartment buildings, rely on tenant screening bureaus to check the background of potential customers. These companies collect information from court records, police blotters, credit bureaus and other sources to help identify risky tenants before they become headaches.
Sounds reasonable, right? Unfortunately, because of the way these screening services collect and store information, responsible tenants can sometimes be branded as risky and can be at a serious disadvantage in tight rental markets.
As with nearly all money matters, one of the most important factors in determining whether you'll pass a tenant screening bureau check is your credit history. Almost every tenant screening company runs a credit check through at least one of the big three credit reporting agencies: Equifax, Experian or TransUnion.
"They're going to look at consumer credit data," says Steve Katz, director of corporate communications at TransUnion, which entered the tenant screening industry in 2004 through the acquisition of RentPort, Inc. "They have to make sure that the individual has a history of being able to meet their financial obligations."
But credit reports are only part of the overall screening process. Tenant screening bureaus collect information from a surprisingly wide range of sources, including utility companies, state governments and even clerks of court. One particularly controversial practice involves sifting through civil court records and archiving the names they find, effectively creating "blacklists" of every tenant that has been involved in litigation with a landlord.
The country's largest tenant screening company, First Advantage SafeRent, recently settled a case alleging that they had intentionally provided incomplete information, purposely excluding the verdicts of tenant-landlord lawsuits in their tenant reports to landlords. The reason: The verdict, even if it showed the tenant to be clearly in the right, was irrelevant; that they had been involved in a suit was enough to make them a serious risk for a prospective landlord.
"There is no way to keep yourself out of a database," says James B. Fishman, a New York-based attorney specializing in the rights of tenants and consumers, who represented Adam White, the tenant who brought the SafeRent suit. "If you try to enforce your rights under the law, then a landlord could retaliate and sue you, and that gets you blacklisted." A spokesman for First American SafeRent declined to comment for this story.
Although the companies that engage in the creation of these blacklists are under considerable pressure to change the way they do business, what they are doing is technically not illegal. In fact, many municipalities, including the City of New York, routinely sell records of tenant-landlord disputes en masse to any tenant bureau that wants to buy them.
"Nobody cared that they were gathering this information," Fishman says. "This only becomes a problem when they're using screening reports to deny apartments."
Criminal records checked too
Another potential source of headaches for prospective tenants is the criminal background check. While many believe they'll sail smoothly through a criminal check that may not always be the case because of the way these checks are conducted.
Ideally, screening companies would use the states' CORI (criminal offender record information) systems to get a complete picture of an individual's criminal record. Unfortunately, because state governments often charge a fee for access to these systems, screening companies may use arrest records instead. This can cause those who have been charged with a crime to be red-flagged even if they were later acquitted.
"The police blotter is public information, but it doesn't tell you the disposition of the case," says Mac McCreight, a senior attorney with the housing unit of Greater Boston Legal Services. "The tenant will have to prove the disposition was positive, and sometimes that can be tricky."
Finally, like their credit bureau brethren, tenant screening bureaus have a tendency to mix up the records of those with similar names. "There can be identity issues that can be problematic," says McCreight. "Those with extremely common names can have problems." In other words, even if you've never done anything that would land you on a tenant screening bureau's blacklist, being a John Smith or a Judy Jones might be enough to get your records scrambled with someone who has.
You are responsible
So is there anything prospective tenants can do to prevent these screening snafus? It's a good news/bad news situation.
The good news: Most tenant screening companies and tenant databases are willing to change inaccuracies or at least investigate them in order to comply with the Fair Credit Reporting Act, a Federal law that requires consumer information collected by credit and tenant bureaus to be fair and accurate. "As with any information that is reported to a credit reporting company, if the information is inaccurate, the consumer can fill out a dispute form online or call us directly," says Clifton O'Neal, director of public relations for TransUnion. "There's a very streamlined process specified by law that ensures a consumer will receive an answer to his or her disputed item within a 30-day period."
The bad news: The burden of finding and changing these inaccuracies and omissions is on the consumer. And by the time an error is corrected, your dream apartment will probably be long gone. "Everything else happens in the meantime and the unit is rented out. There's no link between correcting the information and the process being ground to a halt," says McCreight.
Under the FCRA, consumers are entitled to a free copy of their consumer data from any tenant screening bureau that considers itself a consumer reporting agency (CRA). First Advantage Safe Rent maintains a Web site that gives instructions on how to send for a free copy of your file.
The process for disputing bad information with a tenant screening bureau is nearly identical to the process required to change incorrect information on accredit bureau report.
So if you're looking to rent in a tight market, take a look at your credit report and contact a tenant bureau for a copy of your consumer file. A little bit of planning might prevent your perfect apartment from becoming the one that got away.
Claes Bell is a freelance writer based in North Palm Beach, Fla.
Comments by Marv Steier CEO TVS Tenant Verification Service Inc.
The pitfalls of discriminating against a prospective tenant as described above are easily avoidable, a little common sense, some further due diligence and a screening process that is the same for each and every applicant will keep the landlord and the tenant screening company out of hot water with the various regulatory bodies and civil court.
First of all… every single TVS Client is advised in the "TVS Operating Instructions" to compare the information from the rental application to the information on the credit, criminal record or eviction report to ensure that the personal information matches. i.e. name, date of birth, SSN, address.
Secondly all TVS Clients are advised to conduct further due diligence that includes tenant worthiness…always contact the current landlord to determine whether applicant met all lease obligations that included timely rent payments. http://www.criminalfraud.com/landlord-fraud.php tells you how to interview other landlords and gives you tips & advice on tenant screening.
Interview the applicant and determine whether he/she is compatible with the rental environment, i.e. loud music/parties, friends that stay over for days at a time, smoker, pets, loud car or one that leaks oil, playing musical instruments in a quiet setting, bad language, poor hygiene and unkempt, sporadic employment or low income that might result in late or non-rent payment etc.
You should never reject an applicant based on credit history, criminal history or eviction history …why? Remember the story that you just read above? The reports that you get from the Bureaus and Tenant Screening Agencies may not be totally accurate or factual. Landlords have an option, they can merely say," Mr/Ms Applicant, you do not meet my criteria", END OF STORY.
So what happens when you are questioned as to your criteria? You simply repeat…"you do not meet my criteria". Your criteria may include the fact that you chose to look for a more suitable candidate, which is your right as a landlord. Just do not discriminate - as per Human Rights Issues. http://www.hrc.co.nz/index.php?p=403 scroll down until you see this Prohibited grounds of discrimination (section 21 of the Act)
Familiarize yourself with Prohibited grounds of discrimination, govern your landlord business accordingly, and you should not have a problem.
The KEY to staying out of trouble in this regard is being REASONABLE. If you act in a REASONABLE manner during your tenant screening process then you minimize your risk of running into any issues regarding discrimination.
If you require legal advice at any time in regard to a matter concerning discrimination, contact an Attorney.
Trade your tenant debt for cash and slash your collection costs.
Landlords that want to minimize the risk of renting to bad tenants have a plan that incorporates a due diligence process called tenant screening.
Trade your tenant debt for cash and slash your collection costs.