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Are you properly denying applicants?

Are you properly denying applicants?

Are you properly denying apartment applicants? 

Originally written by: Bill Bower, CIC President/Founder

Have you ever had an applicant that didn’t quite make the cut?

Maybe their credit score didn’t meet your criteria or their monthly income was below your requirement.  Whatever the reason was, did you make sure to send a proper adverse action letter or notice – because if not, you are violating your consumers rights under the Fair Credit Reporting Act.  You need to know constitutes the need for an adverse action notice and what are the best ways to go about providing one or else you might end up with a very disgruntled consumer.

What is considered adverse action in rental transactions?

  • Denying the application
  • Requiring a co-signer
  • Requiring a larger security deposit
  • Charging a higher rent
  • Any terms or conditions which would be different than usually offered for that rental unit

If your applicant falls under any of the considerations above, you are obligated by law to deliver the adverse action in writing.  This includes if your decision was influenced in anyway by the tenant screening report.

What should this notice contain?

Contact  information for the reporting agency which provided the report including the name, address, phone number and a toll free number if the reporting agency maintains files nationwide.

  • If credit was used, it may contain the consumer contact information for the credit bureau (such as TransUnion).
  • It should contain a statement that the reporting agency did not make the decision which resulted in the adverse action and cannot give the specific reasons for that decision.
  • It may contain areas which indicate the information which influenced the decision on the part of the landlord or property manager.
  • A summary of the applicant’s rights under the FCRA and other state laws.
  • A notice of the applicant’s right to dispute the accuracy or completeness of any information furnished by the reporting agency.
  • A notice of the applicant’s right to request a free copy of their credit report from the reporting agency within 60 days of the notice of adverse action.

Don’t take chances – if you aren’t absolutely certain you are operating within the rights of your applicants, ask a tenant screening professional.  Your screening company should be well versed in all aspects to protect your business and should have resources to expedite this process.

For more information: Using Consumer Reports: What Landlords Need to Know

 

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