How Do Landlords Run Credit?

When you fill out a rental application, you are often asked for permission to review your credit history, and landlords will purchase such a report from the main credit reporting bureaus TransUnion, Experian and Equifax. Reports that include other information, including rental history, from specialty consumer reporting agencies are regulated by the Federal Trade Commission.

Specialty Reports

Specialty reports from consumer reporting agencies can include public records of lawsuits, bankruptcies and criminal records. Such agencies may offer "reference checking" services, in which they contact past landlords, and listed residents on behalf of prospective landlords. Some of these reports are available for a one-time fee, while other reporting acengies, such as Lexis-Nexis and Choicepoint, may be available on a subscription basis.

Disclosure

Consumer reports frequently contain errors. If a landlord uses a credit report to take adverse action against a tenant or applicant, they must provide him with the name, telephone number and address of the consumer reporting agency. The notice must include a statement certifying that the agency did not make the decision. It must also contain a notice that the applicant can obtain a free copy of the report from the agency to dispute the accuracy of its contents.

Adverse Action

An adverse action may include turning an applicant down, but it may also include raising the rent to cover a certain amount of risk, requiring a cosigner or requiring a deposit that would not be required of another applicant. Landlords do not have to tell applicants which information contained in the report tipped the scales. Because much of the information contained on the reports is public record, some landlords are savvy enough to perform a background check themselves. They do not have to inform you of the results.

Dozens of Agencies

If you are concerned about errors on a background check, you may review what information they are holding for free. But there are more than 300 members of the National Association of Background Screeners, meaning you may not know where to look because of the sheer number of agencies. The Privacy Rights Clearninghouse recommends by starting with asking the landlord which agency he uses.