What FCRA Means When You Screen a Tenant
Published 2026-08-21
Landlords tend to think of tenant screening as a purchasing decision: which report, from which provider, at what price. The legal exposure is almost entirely on the other side of that transaction — in what you do once the report comes back.
When you order a background or credit report on an applicant, you are using a consumer report and you become an end user under the Fair Credit Reporting Act. That brings obligations that no software discharges for you.
Before you order: permissible purpose and written authorization
You need a permissible purpose to pull a consumer report, and evaluating a rental application is one. You also need the applicant's written authorization. Get it as part of the application itself, keep it, and make sure it says clearly what will be obtained.
Do not screen someone who has not applied, and do not re-run a report months later on a different basis without fresh authorization.
Write your criteria down before you advertise
This is the highest-value ten minutes in the whole process, and almost nobody spends it. Decide in advance, in writing:
- The minimum income multiple you require, and whether a guarantor can substitute.
- Your credit threshold, and how you treat thin files or no credit history.
- How you treat eviction records, including how far back you look.
- How you treat criminal records, consistent with your state and local rules — several jurisdictions restrict what you may consider, when you may consider it, and require an individualized assessment rather than a blanket rule.
- How you handle ties: first qualified applicant, or first complete application.
Written criteria do two things. They keep you consistent, which is the core defence against a fair-housing complaint, and they make your decisions explainable afterwards. Applying different standards to different applicants is a far more common source of liability than any individual report.
Adverse action: what it is and when it triggers
An adverse action is not just a denial. It includes requiring a higher deposit, requiring a co-signer or guarantor, offering a shorter term, or any other less-favourable treatment — if the reason is based even in part on information in a consumer report.
Where the report played a role, the FCRA generally expects a two-step sequence:
- Pre-adverse action notice. Before you act, give the applicant a copy of the report you relied on and a copy of the CFPB's Summary of Your Rights Under the Fair Credit Reporting Act. Then wait a reasonable period so they can review it and dispute an error. There is no single statutory number; several days is a commonly used practice.
- Adverse action notice. After you decide, notify the applicant. The notice must include the name, address and telephone number of the consumer reporting agency that supplied the report; a statement that the agency did not make the decision and cannot explain it; notice of the right to a free copy of the report from that agency within 60 days; and notice of the right to dispute its accuracy directly with the agency.
Notice can generally be given in writing, electronically, or orally, but written notice is the only form you can prove later. Keep a copy with the application file.
A denial for a reason unrelated to the report — the unit was already leased, the applicant withdrew, income verified directly from documents falls short of your published criteria — is not an adverse action under the FCRA. But be honest with yourself about whether the report actually influenced you.
Never hold the applicant's SSN
The Social Security number is the single most damaging piece of data you can collect, and you gain nothing by holding it. A compliant screening provider will collect it directly from the applicant on their own system. Your application form should not have a field for it, your inbox should not contain it, and your filing cabinet should not either. If a provider asks you to collect and forward an SSN, that is a reason to use a different provider.
Records
Keep the application, the signed authorization, the screening result, your written criteria, and any adverse-action notices you sent, together, for as long as your state's limitations period runs. Dispose of consumer report information securely — the FTC's Disposal Rule applies to landlords too, and "throw the file in the recycling" is a live enforcement risk.
How screening works in PropertyFolio
PropertyFolio resells background checks from Checkr Tenant; it is not a consumer reporting agency and does not produce reports. The applicant completes the check on Checkr's own hosted page and enters their identifying information, including their SSN, there — it never reaches PropertyFolio's systems. Results come back as a per-check breakdown covering criminal records, eviction records, the sex-offender registry and the global watchlist, with credit and income on the larger package, and both you and the applicant can download the full consumer report PDF. You can set either yourself or the tenant as the payer.
When you decline an applicant on the basis of the report, PropertyFolio marks the screening as requiring adverse action so it is not forgotten — but you serve the notices yourself. The app does not generate or send pre-adverse or adverse-action notices, and no screening product we integrate with does it for you either.
This article is general information, not legal advice. FCRA requirements, state screening restrictions and local fair-housing ordinances change and vary; consult an attorney about your own screening policy.