If you’ve ever wondered why your new landlord wants to run a credit check before agreeing to let you move in, consider all the insights a credit report can give a landlord. Whether you’re looking for a studio apartment for rent in Baltimore, MD, or a sleek townhouse in Washington, DC, these reports are important tools that clue a landlord in on any past credit problems, bankruptcy, or eviction history.
Tenant “specialty” reports, though, often include not only credit information but also employment and criminal history, entries on sex offender lists, driving records, and more. A detailed tenant background check can also include personal information gathered from interviews with your neighbors, former landlords, and others.
But what happens to this information once it’s compiled? We caught up with attorney Janet Portman, author of several books on landlord/tenant rights including Every Tenant’s Legal Guide, to find out what landlords and tenants need to know about background-check privacy.
Why does a landlord need all of this info in the first place?
The credit check process has been around for a very long time, says Portman, but background reporting is relatively new. All three national credit bureaus (Experian, TransUnion, and Equifax) now offer paid tenant screening products for landlords. TransUnion, for example, offers a product called SmartMove, an online tool that compiles information submitted by both consumers and landlords. That information is then used to predict your risk level as a tenant; some even go as far as recommending whether a landlord should accept you or not. (Really!) On its website, the company says it takes precautions to ensure data security by leaving off full account numbers on credit reports, using private phone lines for communications, and controlling their databases through secured passwords. But is that enough?
“These companies purport to have access to criminal conviction databases, but [those databases] often are inaccurate and incomplete,” Portman says. “They depend on local courthouses reporting the data regularly and accurately — they can’t ensure it; all they can do is regularly upload data. It all sounds very sophisticated, but no matter how carefully they say they manage it, the problem remains.”
The only tried-and-true process for landlords to vet tenants, she adds, is old-fashioned detective work. “A very effective practice is calling the last landlord, who has no ulterior motive to give you a false positive,” she says. They can ask if the tenant paid on time, took care of the residence, and other questions that will help landlords determine whether the tenant will be responsible. “But of course, the only landlords who can do that are those who have the time and don’t depend on volume.”
Bottom line: If you have a criminal history or credit issues, you may have better success renting directly from a landlord than dealing with a property management company that may rely on automated reports such as SmartMove to screen tenants.
How can I make sure my information is correct?
The Fair Credit Reporting Act (FCRA) gives tenants the right to obtain their personal file from a “specialty” reporting company. Some of the larger national tenant screening companies, such as LexisNexis and CoreLogic, allow you to submit file disclosures on their websites.
Trying to track down documents and correct errors can be time-consuming. At the very least, tenants should ask for the name of the company the landlord plans to use, says Portman, and follow up after the report is generated to rectify any discrepancies.
How do I know my landlord is keeping my info safe?
Now that you’ve double-checked your documents and made sure everything’s in order, how do you know that sensitive information will be kept safe once your landlord has reviewed it? Good question.
Under federal law, landlords must take special precautions to ensure that credit reports (and other personal information) are stored in a secure place where only those who need them have access. Before landlords can get access to credit reporting, Portman says, most tenant-screening companies require them to pass a physical inspection to show that they are set up to safeguard the information. “If they become sloppy, and leave credit reports on the top drawer of the desk, and the identity is stolen, in general you’d have a negligence lawsuit for failing to take steps to protect your identity,” she says.
“Once the landlord has a paper copy of your documents,” Portman says, “you can ask to be present when they shred it, but you have no true way of knowing if they’re deleting it from their computer files or had other copies elsewhere.”
When it comes to credit checks, know what you’re up against. Check your credit every year. Make sure what you see is accurate — and immediately handle any inaccuracies or issues. But for background checks, it’s worth taking some precautions. Before submitting any personal information, Portman says, tenants should start by asking the landlord or property management company what measures they plan to take to keep the information safe. Keep in mind that if your landlord is using a third-party screening company to generate a report about you as a tenant, you have the same rights under the FCRA as you do when a landlord checks just your credit report. If that personal information is inappropriately shared or stolen, your landlord may be responsible for damages to you.
Have you ever worried about sensitive information you’ve given your landlord? Share your experiences in the comments below!