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How to Run a Rental History Report: A Landlord’s Indispensable Guide

Running a rental history report is a cornerstone of responsible property management. It’s your shield against potentially problematic tenants and your key to securing reliable renters who will treat your property with respect. So, how do you do it?

The process involves several key steps: obtaining applicant consent, choosing a reputable tenant screening service, ordering the report, and carefully interpreting the results while adhering to all relevant legal guidelines, particularly the Fair Credit Reporting Act (FCRA). Let’s delve into each of these stages.

Gaining Consent and Staying Compliant

The Importance of Written Consent

The absolute first step, and non-negotiable, is obtaining written consent from your prospective tenant. You cannot, under any circumstances, run a rental history report without their explicit permission. This consent should be a standalone form or clearly integrated into your rental application. It needs to state clearly that you intend to obtain a report that may include information about their rental history, credit history, and potential criminal background. This is essential to comply with the FCRA and various state and local laws.

Specifics to Include in Your Consent Form

Your consent form should include:

The applicant’s full name and date of birth.
Their current and previous addresses (as relevant to the rental history).
A clear statement informing them that you will be obtaining a rental history report and what the report might contain.
Contact information for the consumer reporting agency you intend to use.
A signature line and date for the applicant to acknowledge their consent.

Failure to obtain proper consent can lead to severe legal repercussions. Treat this step with the utmost seriousness.

Choosing the Right Tenant Screening Service

Beyond the Basics: Features to Consider

Selecting the right tenant screening service is crucial. While many companies offer basic credit checks, you need a service that provides comprehensive insights into a renter’s past. Consider these factors:

Rental History Verification: Does the service directly contact previous landlords to confirm rental history details like payment behavior, lease violations, and property damage?
Credit Report Accuracy: Ensure the credit reports are pulled from a reputable credit bureau (Experian, Equifax, or TransUnion) and include credit scores.
Criminal Background Checks: Are national and local criminal databases searched to identify potential risks?
Eviction History: Does the report include eviction records, a critical indicator of past tenant behavior?
FCRA Compliance: Is the service committed to complying with the Fair Credit Reporting Act? Do they provide clear guidance on adverse action procedures?
Data Security: How secure is the tenant screening service’s data storage and transmission? You are dealing with sensitive personal information, so security is paramount.
Reporting Speed and Customer Support: How quickly are the reports generated, and what level of customer support is offered should you encounter any issues?

Popular Tenant Screening Service Providers

Several reliable tenant screening services are available, each with varying features and pricing. Some popular options include:

Experian Connect: Offers credit reports and background checks.
TransUnion SmartMove: Provides comprehensive screening packages, including credit, criminal, and eviction history.
RentPrep: Known for manual screening and a focus on affordability.
TenantReports.com: Offers a range of screening options, including rental history verification.

Research and compare these providers to find the best fit for your specific needs and budget. Look for independent reviews and testimonials to get a sense of their reliability and customer satisfaction.

Ordering and Interpreting the Report

Providing Accurate Information

When ordering the report, ensure you provide the tenant screening service with accurate information about the applicant, including their full name, date of birth, and current address. Any discrepancies can lead to inaccurate or incomplete reports.

Understanding Key Metrics

Once you receive the rental history report, carefully review all sections. Pay close attention to:

Credit Score: A higher credit score generally indicates a more financially responsible tenant.
Payment History: Look for late or missed payments, which could signal a risk of future rent defaults.
Debt-to-Income Ratio: This ratio can provide insight into the applicant’s ability to manage their finances and afford rent.
Eviction Records: Evictions are a significant red flag and should be carefully considered.
Criminal History: Analyze any criminal records in light of applicable laws and your own risk tolerance. Remember, blanket denials based solely on criminal history can be discriminatory and illegal.
Landlord References: These are invaluable. Contact previous landlords to ask about the tenant’s behavior, payment habits, and property maintenance.

Documenting Your Decision

Regardless of your decision, meticulously document your screening process. This includes the consent form, the rental history report, and your reasons for approving or denying the application. This documentation will be crucial in defending against any potential claims of discrimination.

Adverse Action and Fair Housing Laws

Notifying the Applicant

If you decide to deny an application based on information in the rental history report, you are legally obligated to provide the applicant with an adverse action notice. This notice must include:

The name, address, and phone number of the consumer reporting agency that provided the report.
A statement that the consumer reporting agency did not make the decision to deny the application and cannot explain why the adverse action was taken.
A statement of the applicant’s right to obtain a free copy of the report from the consumer reporting agency within 60 days.
A statement of the applicant’s right to dispute the accuracy or completeness of the information in the report.

Adhering to Fair Housing Laws

It’s crucial to remember that you cannot discriminate against applicants based on protected characteristics such as race, color, religion, national origin, sex, familial status, or disability. Your screening criteria must be consistently applied to all applicants, and you must be able to justify your decisions based on objective, business-related factors. Consult with legal counsel to ensure your screening process complies with all applicable fair housing laws.

Frequently Asked Questions (FAQs)

1. What is the difference between a credit report and a rental history report?

A credit report primarily focuses on an applicant’s creditworthiness, including their credit score, payment history, and outstanding debts. A rental history report is broader, incorporating credit information but also including details from previous landlords about rent payment behavior, lease violations, and property damage. Ideally, you’ll want both.

2. How much does a rental history report typically cost?

The cost of a rental history report varies depending on the provider and the comprehensiveness of the report. Basic credit reports can range from $20 to $40, while more comprehensive screening packages can cost $40 to $75 or more. Some providers offer subscription-based pricing for landlords who conduct frequent screenings.

3. Can I require applicants to pay for the rental history report?

In many states, it is permissible to charge applicants a fee to cover the cost of the rental history report. However, some states and local jurisdictions have laws restricting or prohibiting this practice. Check your local regulations before implementing such a fee.

4. What if an applicant refuses to provide consent for a rental history report?

If an applicant refuses to provide consent, you are unable to run a rental history report. In this scenario, you can deny their application based on their failure to cooperate with your legitimate screening process.

5. How long should I keep rental history reports and related documents?

The length of time you should retain rental history reports and related documents varies by jurisdiction. Consult with legal counsel or a property management association in your area for guidance on record retention policies. Generally, you should retain these documents for at least the duration of the tenancy and potentially longer to protect yourself against potential legal claims.

6. What should I do if an applicant disputes information in their rental history report?

If an applicant disputes information in their rental history report, you should advise them to contact the consumer reporting agency directly to initiate a dispute process. You should also review your own records to verify the accuracy of the information you provided.

7. Can I use information from social media to screen tenants?

Using information from social media to screen tenants is generally discouraged and can potentially lead to fair housing violations. It is best to rely on objective, verifiable information from credit reports, rental history reports, and landlord references.

8. Is it legal to deny an application based on a low credit score?

Yes, it is generally legal to deny an application based on a low credit score, as long as you consistently apply this criteria to all applicants and can demonstrate a legitimate business reason for doing so. However, you must provide the applicant with an adverse action notice and comply with all applicable fair housing laws.

9. What are the potential legal risks of not running a rental history report?

Failing to run a rental history report can expose you to several legal risks, including:

Negligent Tenant Selection: You could be held liable for damages caused by a tenant you failed to adequately screen.
Fair Housing Violations: If you selectively screen applicants based on protected characteristics, you could face discrimination lawsuits.

10. How can I ensure my tenant screening process is fair and non-discriminatory?

To ensure your tenant screening process is fair and non-discriminatory:

Develop clear and consistent screening criteria.
Apply your criteria equally to all applicants.
Document your screening process and decision-making.
Avoid using subjective or discriminatory criteria.
Consult with legal counsel to review your policies and procedures.

11. What is “Individualized Assessment” when considering criminal history?

Individualized assessment means considering the specific facts and circumstances of an applicant’s criminal history rather than implementing a blanket ban. This includes the nature and severity of the offense, the time elapsed since the offense, and any evidence of rehabilitation. Many jurisdictions require landlords to conduct individualized assessments.

12. If I use a property management company, are they responsible for running rental history reports?

Typically, yes. Most property management companies include tenant screening, including rental history reports, as part of their services. However, it’s critical to review your contract with the property management company to confirm their responsibilities and ensure they are complying with all applicable laws.

By following these steps and staying informed about your legal obligations, you can effectively run rental history reports and protect your investment while maintaining a fair and compliant tenant screening process.