How to Be Fair Credit Reporting Act (FCRA) Compliant
Be
Fair Credit Reporting Act (FCRA)
Compliant
You need a permissible
purpose. For the
multifamily industry, that generally means that you can only obtain
a consumer report in connection with a lease application or an
attempt to collect a bad debt. Other permissible purposes also
include the use of information for the extension of credit or the
review or collection of an account, for employment purposes and for
underwriting of insurance. FCRA Section
604.
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Signed authorization from the applicant
and keep it on file. Although the law states that you do not
need a signature if you have a permissible purpose, a signed
authorization form provides you with an additional level of
security. The authorization can either be incorporated within the
rental application or on a separate form. The authorization should
inform the consumer of the information that will be reviewed in the
leasing decision.
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A letter sent to any applicant with whom
you have taken an "Adverse
Action".
Adverse action does not just include
denying a consumer's application for an apartment, but also
includes any action that negatively affects the consumer. For
example: requiring a guarantor if not required of other applicants;
or not providing an applicant with promotional offers such as a
free month of rent.
The adverse action or declination letter must contain the following
information: the name and address of the consumer reporting agency
that issued the report; a statement that the consumer reporting
agency did not make the decision to take adverse action; notice of
the consumer's rights to obtain a free copy of the report within 60
days of the adverse action and the consumer's rights to dispute the
accuracy and completeness of the information with the consumer
reporting agency. FCRA Section 603(k). Landlord2Landlord generates
an "adverse action" or “declination letter” by selecting the letter
option at the bottom of the application order screen. You may also
use your own "adverse action" or consumer “declination
letter”.
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You are permitted to give an applicant
a copy of their consumer report. The FCRA does not prevent you from
providing a copy of the report to the consumer if asked. In many
cases though, the consumer will not be able to understand the
report because they are unfamiliar with the information. Therefore,
we advise you to have the consumer contact the consumer-reporting
agency for a copy and assistance.
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You are allowed to discuss and show the
applicant their consumer report. If the contents of the consumer report
lead to an adverse action, your company has the option to discuss
the contents of the consumer report with the applicant as it
relates to the decision. You may discuss specific items or problems
on the consumer report. If possible, the discussion should be
limited to the information that led to the decision. FCRA Section
607(c).
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You cannot consider data that is more
than seven years old. Under the FCRA you are not allowed to
consider credit and eviction record history that is reported by
more than seven (7) years when evaluating an applicant. Consumer
reporting agencies will not provide older information except in the
case of conviction of crimes and certain bankruptcies that can be
reported for up to ten (10) years. FCRA Section
605.
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You cannot request a consumer report on
yourself. Using
your subscriber account number to access information on oneself is
not a permissible purpose under the Fair Credit Reporting Act
(FCRA). To do so would place you in violation of the FCRA, and you
would be liable to the consumer reporting agency for actual damages
sustained by the consumer reporting agency or a $2,500 fine,
whichever is greater.
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Consumer reports should be held in the
strictest confidence. Security is very important. Access to
the reports should be limited only to those employees who need to
have access and have been properly trained. Additionally, consumer
reports must be kept in an area that is secure or
locked.
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Passwords and access codes to consumer
report software should be maintained regularly.
Passwords and codes used to
access consumer report software should not be posted on or near
your computers and should be changed on a regular basis. Passwords
of employees who leave the company and had access to consumer
reports should be deactivated
immediately.
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Employees should be trained on the Fair
Credit Reporting Act (FCRA). Employees who have access to consumer
reports should be trained on the sensitive nature of consumer
information and the civil and criminal liability for misuse of this
information. These issues should be an integral part of your
company's training process.
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