US tenant screening reports: a landlord's duties under the FCRA

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Kooky

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A rental application in the United States usually ends with a file bought from a third party: a credit report, a list of court records, a score, or all three together. The moment a landlord or property manager orders that file, a federal statute written for the credit industry starts to apply to the letting. The Fair Credit Reporting Act, known as the FCRA, governs who may obtain the report, what must be said to the applicant when it counts against them, what the company that compiled it owes to accuracy, and how the file is destroyed afterwards.

This guide follows the report through its whole life, using the Federal Trade Commission's guidance for landlords, the Commission's guidance for tenant screening companies and an advisory opinion on background screening issued by the Consumer Financial Protection Bureau in January 2024. It covers federal law only. State and local screening laws sit on top of it, and the Commission's landlord guidance tells housing providers to review them.

Federal Trade Commission guidance for landlords (2023); Consumer Financial Protection Bureau advisory opinion on background screening (January 2024).

Which rental files count as consumer reports

The Federal Trade Commission's guidance "Using Consumer Reports: What Landlords Need to Know", published on 2 June 2023 and modified on 26 July 2023, is addressed to landlords, property managers and other housing providers who screen applicants or decide on lease renewals. It says the background checks they use, whether they cover rental history, credit history, eviction history or criminal records, are consumer reports, and that anyone using them must follow the FCRA. The same page states that the Commission enforces the Act.

The page lists six kinds of file that fall inside the definition:

1. A credit report from a credit bureau such as TransUnion, Experian or Equifax, or from an affiliate.
2. A tenant screening report on rental history, built from prior landlords or housing court records.
3. A background check report on criminal history.
4. A combined tenant screening report covering rental and criminal history and including a credit report.
5. A risk score or recommendation based on criteria the landlord selects.
6. A report from a reference-checking service, based on its exchanges with prior landlords, employers or other parties the applicant listed.

The fifth item is the one that surprises people. A landlord who never sees the underlying records, and receives only a score or an "accept" or "decline" recommendation, has still received a consumer report. The duties described in this guide attach to that recommendation exactly as they attach to a full credit file.

The Commission's companion guidance for screening companies explains the definition from the seller's side. A background screening report is a consumer report when it helps determine a person's eligibility for housing, employment, credit, insurance or other purposes and contains information about the person's credit or character, such as general reputation or mode of living. Companies that sell or provide such reports are consumer reporting agencies, the Commission says, even if they do not think of themselves that way. The definition is found in section 603 of the Act, which is section 1681a(d) of title 15 of the United States Code.

Permissible purpose and the landlord's certification

A consumer report cannot be bought out of curiosity. The Act lists the purposes for which an agency may release one, and the Commission cites section 604(a)(3)(F), which is section 1681b(a)(3)(F) of title 15, as the provision a landlord relies on. According to the landlord guidance, a landlord may obtain a report on applicants and tenants who apply to rent housing or to renew a lease. Written permission from the applicant or tenant is a second route to a permissible purpose.

Before the report is supplied, the landlord must make a certification to the agency: that the report will be used only for housing purposes and for no other purpose. The screening company has a matching duty. The Commission's guidance for screening companies says an agency may provide reports only for a permissible purpose such as housing, and should verify who its clients are and have them certify housing-only use. It places these duties in section 607 of the Act, at section 1681e(a) of title 15, headed in the Commission's table as user identity verification and purpose certification.

The agency also owes its clients a document. Under section 1681e(d), the company must give landlords information about their responsibilities by way of the "Notice to Users of Consumer Reports", a standard text which the Commission says is published by the Consumer Financial Protection Bureau. It may arrive with the report or before it.

One type of report carries an extra step. The Commission describes an investigative report as one based on personal interviews about a person's character, reputation, personal characteristics or lifestyle. A landlord who may request, or has requested, such a report must tell the person so in writing, and the notice must say that the person may ask for additional disclosures and for a summary of the scope and substance of the report. The Commission cites section 606 of the Act, section 1681d(a) and (b) of title 15.

What counts as an adverse action

The Commission defines an adverse action as any action by a landlord that is unfavourable to the interests of a rental applicant or tenant. A refusal is the obvious case, and the guidance goes well beyond it. Its examples are denying the application, requiring a co-signer on the lease, requiring a deposit that would not be required of another applicant, requiring a larger deposit than another applicant would face, and charging higher rent than another applicant.

That list matters because of how lettings are decided in practice. An application that is approved "with conditions" feels like a yes to the person who signs the lease. Under the Commission's reading, a yes that costs more because of what the report said is an adverse action all the same. The applicant who is asked for a guarantor, the applicant who pays a higher deposit and the applicant quoted a higher rent each stand in the same legal position as the one who is turned away.

The trigger is the role the report played. The guidance says a notice is required when the landlord acts based partly or wholly on information in a consumer report. It adds that this holds even where the report was not the main reason for the decision, and even where it played only a small part. A landlord who weighs income, references and a credit file together, and who would have reached the same view on income alone, has still used the report if it formed part of the reasoning.

The reverse also follows from that wording. Where the unfavourable decision rests on something other than a consumer report, the notice described in section 615(a) is not what the guidance is talking about. Whether a given decision relied on the report is a question of fact for each application.

Five cases the Commission works through

The landlord guidance closes with five short scenarios. In every one, the Commission concludes that an adverse action notice is required. They are useful because each removes an excuse a housing provider might otherwise reach for.

The second case can be put into figures as a worked example, with amounts chosen purely for illustration. Assume a landlord's usual security deposit is US$1,500 and that, after reading a credit report showing a bankruptcy, the landlord asks one applicant for double that amount. Double US$1,500 is US$3,000, so the applicant is asked for US$1,500 more than another applicant would pay. The lease is offered, the applicant may well accept it, and under the Commission's example the notice is due because the extra US$1,500 flows from the report. Whether any deposit of that size is permitted at all is a matter for state and local law, which this guide does not cover.

The guidance does not discuss co-applicants, so it does not say how the notice works where two people apply together and the report on only one of them causes the condition. That question is left open by the pages read for this guide.

What the notice must tell the applicant

The duty comes from section 615(a) of the Act, section 1681m(a) of title 15. The Commission sets out three things the notice must contain:

1. The name, address and telephone number of the consumer reporting agency that supplied the report.
2. A statement that the agency did not make the adverse decision and cannot give the specific reasons for it.
3. Notice of the person's right to dispute the accuracy or completeness of any information the agency furnished, and of the right to a free report from that agency if the person asks within 60 days.

Each item has a job. The first tells the applicant where the information came from, which a person refused by a property manager may have no other way of learning. The second heads off a wasted call: the screening company holds the data, and the decision belongs to the landlord. The third opens the route to correction, since a person cannot dispute a record they have never seen.

On form, the Commission says the notice may be given in writing, electronically or orally. It describes written and electronic notices as the best practice for two reasons: they give the landlord proof of compliance, and they help people request their reports and dispute errors.

Where a credit score was a factor in the decision, more is required, and here the Commission specifies a written or electronic notice. It must give the score itself; a description of the score, meaning its source, the date it was created and the range of scores possible under that model; and the key factors that adversely affected the score, listed in order of importance.

A worked example shows the 60-day window on a simple count of calendar days, with dates chosen for illustration. A property manager sends an adverse action notice on 2 March 2026. Thirty days later is 1 April 2026, and sixty days later is 1 May 2026, which on this count is the last day to ask the agency for the free report. How the period is counted in a particular case, and the exact event that starts it, depend on the wording of the statute, which the Commission's page summarises without setting out in full.

The guidance says nothing about an applicant's remedy against a landlord who gives no notice, and it states no penalty or dollar amount. It records only that the Commission enforces the Act.

Accuracy: what the screening company owes

The landlord's duties are about purpose and notice. The duty to get the facts right sits with the company that compiles the report. Section 607(b) of the Act, section 1681e(b) of title 15, requires an agency to follow "reasonable procedures to assure maximum possible accuracy". The Commission's guidance for screening companies lists four warning signs that a company's procedures fall short: reports containing records that belong to other people, for instance someone with a different middle name or date of birth; multiple entries for the same offence; expunged or sealed records; and housing court actions listed without their outcome.

The Consumer Financial Protection Bureau returned to the same provision in its advisory opinion "Fair Credit Reporting; Background Screening", an interpretive rule under part 1022 of title 12 of the Code of Federal Regulations, published in the Federal Register on 23 January 2024 and effective that day. Whether the Bureau has since withdrawn, rescinded or replaced the opinion was not checked for this guide, and everything below describes the text as issued. The opinion states that an agency reporting public record information does not have reasonable procedures unless those procedures do two things: prevent the reporting of duplicative information and of information that has been expunged, sealed or otherwise legally restricted from public access; and include any existing disposition information whenever arrests, criminal charges, eviction proceedings or other court filings are reported.

On duplicates, the Bureau says agencies that draw on more than one source must take particular care, that the stages of one court case must be presented so that they clearly relate to the same case, and that at a minimum all information about one case should be collated and shown together. On restricted records, it draws a line that is easy to apply: a record that cannot be obtained directly from the government body that maintains it must not be in the report. It explains that expungement removes a record entirely while sealing removes it from public view, and suggests procedures such as reporting only newly gathered information, cross-checking stored data against updated sources, or obtaining lists of expunged matters from the original source.

Disposition means how a matter ended. The Bureau's example is an arrest on charges later dismissed: reporting the arrest without the dismissal is, in its words, "misleading and inaccurate". For a letting, the parallel is an eviction filing shown without the outcome of the case. The opinion cites a 2018 survey by SEARCH finding that, across 48 states and the District of Columbia, an average of 64 per cent of arrests entered in state databases in the previous five years had a final disposition recorded.

The opinion also gives a sense of scale for matching errors. It cites a study reported on 28 September 2023 in which 74 per cent of the criminal charges appearing on the background reports of 101 participants had no match in official state records, and one report attributed 50 charges to a participant who had two drug convictions. An earlier Bureau advisory opinion, published in the Federal Register on 10 November 2021, had already said that matching records by name alone is not a reasonable procedure under section 607(b).

How long a record may be reported

Section 605 of the Act, section 1681c of title 15, limits how far back a report may reach. The January 2024 advisory opinion sets out the periods and, more importantly, when each one starts.

The Bureau's reading has three parts. Each adverse item has its own seven-year period, measured from the adverse event. Later events do not restart or reopen that period. And a disposition that is not a conviction, such as a dismissal, dropped charges or an acquittal, does not start a period of its own, because reporting the dismissal reveals the earlier charge. The opinion rejects counting from the disposition date.

A worked example, with dates chosen for illustration. A charge is entered on 15 May 2018 and dismissed on 10 January 2019. Counting from the charge, seven years runs to 15 May 2025. A screening report prepared on 1 June 2025 would therefore antedate the charge by more than seven years, and on the Bureau's reading neither the charge nor its dismissal may appear. Counting from the dismissal would have kept the item reportable until 10 January 2026, about eight months longer, which is the method the opinion rules out.

Convictions are treated differently: the opinion says records of criminal convictions are excluded from the limit in section 605(a)(5). It adds a refinement. The arrest that led to a conviction is still subject to the seven-year period from its own date of entry, so an old report may lawfully show the conviction while the underlying arrest entry has aged out.

Disputes and access to the file

The applicant's rights against the screening company are listed in the Commission's guidance for those companies. The company must give consumers access to their files on request, under section 609 of the Act, with section 610 governing the form of that disclosure and section 612 the charges for it. When a consumer disputes the accuracy of information, the company must conduct a reasonable investigation, under section 611, section 1681i of title 15, and must give written notice of the results. Copies sent to consumers must come with the document "A Summary of Your Rights Under the Fair Credit Reporting Act".

Two further statements on that page concern conduct. Failing to respond to inquiries and disputes in a timely way is a violation, and so is creating unreasonable obstacles to consumers exercising their rights.

The Bureau's advisory opinion adds a rule about what happens after a successful dispute. Citing section 611(a)(5)(C), it says information deleted from a file must not reappear, including where a third-party vendor supplies it again. For an agency that buys court data in bulk, that means the correction has to survive the next data delivery.

The two Commission pages do not give the number of days an agency has to complete an investigation, and the statute's text was not among the pages read for this guide. The deadline is therefore not stated here.

For the landlord, the practical link is the notice. The dispute right belongs to the applicant and is exercised against the agency, and the notice is the document that tells the applicant which agency to approach. The guidance read for this guide does not say whether a landlord must hold a unit or revisit a decision while a dispute is running.

Enforcement actions and what a breach can cost

The advisory opinion names the cases on which the Bureau's reading rests, and two of them concern tenant screening directly. On 8 December 2020 the Federal Trade Commission brought a case against AppFolio in the federal court for the District of Columbia, which the opinion cites for disposition information, the labelling of offences and duplicate entries. On 12 October 2023 the Bureau and the Commission acted together against TransUnion Rental Screening Solutions in the federal court for the District of Colorado, over duplicate eviction entries, the reporting of dispositions, data labelling and sealed records; the opinion notes a stipulated order requiring written procedures. According to the title of the Commission's press release on that case, the settlement requires Trans Union to pay US$15 million. Only the title of that release was read for this guide, not its text, so the figure rests on the title alone, and how the sum divides between redress and penalty is not stated here.

The opinion also cites older actions on the same themes, among them a Bureau consent order of 29 October 2015 against General Information Services over expunged records, and it refers to the Bureau's Tenant Background Checks Market report of November 2022.

On private liability, the opinion summarises two sections. Under section 617, section 1681o of title 15, negligent non-compliance makes a party liable to the consumer for actual damages, plus costs and reasonable attorney's fees. Under section 616, section 1681n, wilful non-compliance brings actual damages or statutory damages of up to US$1,000 per violation, punitive damages as the court allows, and costs and fees. The Bureau warns that agencies risk liability for wilful violations where they act against the reading set out in the opinion.

Disposal, and reporting back to an agency

The duties do not end when the lease is signed or the application refused. The Commission's landlord guidance says consumer reports, and any information gathered from them, must be securely disposed of once they are no longer needed. For paper it names burning, pulverising or shredding. For electronic information it requires disposal in a way that means the information cannot be read or reconstructed. The Commission points to a separate guide on its disposal rule; the text of that rule was not read for this guide, so no retention period or further method is given here.

The phrase "any information gathered from them" is the part to notice. A score copied into a spreadsheet, or a note on an application form recording what the report showed, is information drawn from the report and falls under the same instruction.

There is one more way a landlord can come under the Act. A housing provider who reports late rent payments or evictions to a consumer reporting agency becomes a supplier of information, and the Commission says such a landlord takes on obligations under the FCRA and under its Furnisher Rule. The advisory opinion likewise cites a Bureau bulletin of 1 July 2021 on the reporting of rental information.

Where fair housing law meets the screening file

The FCRA regulates how a report is obtained, used and corrected. It does not decide which screening criteria are fair. That question belongs to fair housing law, and the Commission's landlord guidance touches it once: it says a landlord who applies a blanket policy of refusing to rent to anyone with a criminal record may violate the Fair Housing Act, and refers readers to the Department of Housing and Urban Development.

The two statutes can therefore apply to the same decision in different ways. In the Commission's fifth example, a refusal based on a felony conviction in a criminal history report requires an adverse action notice. Giving that notice satisfies the FCRA duty. It says nothing about whether the policy behind the refusal is lawful under the Fair Housing Act, which is a separate analysis.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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