In Practice
If you ask what is FCRA, the short version is this: the Fair Credit Reporting Act is the federal law that controls how credit reports, background checks and other consumer reports can be collected and used. It matters in leasing because most apartment screening is built on those reports. It covers accuracy, privacy, and what you owe an applicant when a report affects your decision.
As a housing provider, you need a permissible purpose to pull a report, and applicants generally need to authorize it. If you deny an application, ask for a larger deposit, require a co-signer or change other terms because of what a report says, you have to send an adverse action notice. That notice names the reporting company, says the company did not make the decision, and explains the applicant's right to a free copy of the report and to dispute errors.
Example: an applicant has a collections account, and your policy requires a co-signer for that. Because the co-signer requirement is based on the report, you send the adverse action notice, even though you did not deny them.
Common mistakes include skipping the notice when the decision is only a higher deposit, saving reports where anyone can see them, and keeping reports too long. Reports need to be stored securely and disposed of properly. Apply your criteria the same way for every applicant to stay on the right side of fair housing as well. State laws add more rules, so check local law and counsel.
Not to Be Confused With
The FCRA controls how consumer reports are obtained and used. Fair housing law bans discrimination. A screening decision has to follow both.
FCRA: Common Questions
Does the FCRA apply to landlords?
Yes. When a landlord uses a consumer report, such as a credit or screening report, to make a rental decision, FCRA duties apply, including adverse action notices.
What must an adverse action notice include?
It generally names the reporting company, states that the company did not make the decision, and tells the applicant about the right to a free copy of the report and to dispute inaccurate information.
Is FCRA the same as fair housing?
No. The FCRA covers how reports are used. Fair housing covers discrimination. A screening process must satisfy both.
