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The short answer: under the Fair Credit Reporting Act (FCRA), you can pull an applicant's credit or background report if you have a permissible purpose, which a landlord generally has when evaluating a rental application or a tenant's request to renew a lease. If anything in that report leads you to deny them, or to approve them on worse terms, you must send an adverse action notice. When you're done with the report, you must dispose of it securely. If you get any of these wrong, the applicant can sue you for damages.
This guide explains each of those duties, what applicants are entitled to, and how to run FCRA-compliant tenant screening without a compliance team. This is general information, not legal advice.
Part 1: Understanding the Fair Credit Reporting Act
The Fair Credit Reporting Act is a federal law passed in 1970. It controls how consumer reporting agencies collect and share information about people, who is allowed to see it, and what anyone who uses it has to do.
It has three main goals:
- Keep the information in consumer reports accurate.
- Protect privacy by limiting who can get a report and why.
- Give people the right to see and dispute what's in their file.
For landlords, the key term is consumer report. That covers more than a credit report. Tenant screening reports that include eviction records, criminal history or rental history count too, so the same rules apply to all of them.
Who enforces the FCRA
- Federal Trade Commission (FTC): enforces the FCRA against most businesses that use consumer reports, including landlords and property managers, and publishes guidance for landlords.
- Consumer Financial Protection Bureau (CFPB): writes most of the rules that implement the FCRA (Regulation V) and supervises the large credit bureaus.
Applicants can also bring their own lawsuits.
Part 2: Why the FCRA Matters for Landlords
A credit report shows how an applicant has handled bills, how much debt they carry, and whether anything has gone to collections. Many landlords use it to decide whether to approve an application and on what terms, including the size of the security deposit.
The FCRA affects you in three ways:
- What's in the report. The law limits how long negative items can be reported. Most negative information drops off after seven years, and bankruptcies after ten.
- When you can get one. You need a permissible purpose. You generally have one when you're evaluating a rental application or a renewal request; curiosity about a current tenant's finances doesn't count.
- What you owe the applicant afterwards. If the report affects your decision, the applicant has a right to know and a chance to correct errors.
Part 3: Landlord Responsibilities Under the FCRA
1. Have a permissible purpose before you pull a report
You can get a consumer report on someone who applies to rent from you, or on a tenant who asks to renew a lease. The FCRA calls this a legitimate business need in connection with a transaction the consumer started.
Written consent isn't what the FCRA requires here, but get it anyway. The standalone disclosure and written authorization rules people often quote come from the FCRA's employment-screening section, and they don't apply to rental applications. Signed consent is still the clearest proof that you had a permissible purpose, and most screening services, including TransUnion SmartMove, require the applicant to agree before a report is run. Put a consent line in your rental application or use a screening service that collects it for you.
2. Use a legitimate consumer reporting agency
Get credit reports for tenant screening through a screening company or credit bureau that operates as a consumer reporting agency under the FCRA. It will verify that you're a landlord with a permissible purpose, and it has its own duties to keep reports accurate. See our comparison of the best tenant screening services.
3. Send an adverse action notice when the report affects your decision
This is the duty landlords most often miss, because "adverse action" means more than a denial. According to the FTC, it includes:
- Denying the application.
- Requiring a co-signer.
- Requiring a deposit you wouldn't ask of another applicant.
- Requiring a larger deposit than you'd ask of another applicant.
- Charging higher rent than you'd charge another applicant.
If any of these is based even partly on information in a consumer report, the notice must include:
The FCRA doesn't require you to give your own reasons for the decision. Federal law allows an oral notice, but always send it in writing. A written notice is also your record that you complied. State law may impose additional notice or disclosure requirements. For example, Washington requires landlords to provide a written adverse action notice stating the reasons for the decision. Check your state's tenant screening laws for anything your notice needs to add. Our rental application denial letter template covers the required wording.
4. Store reports securely and dispose of them properly
Keep reports where only the people making the rental decision can see them. When you no longer need a report, the FTC's Disposal Rule requires you to destroy it so it can't be read or reconstructed. For paper, that means shredding, burning or pulverizing. For electronic records, use reasonable disposal measures that make the information unreadable and unable to be reconstructed.
5. Apply the same screening criteria to everyone
This one comes from fair housing law rather than the FCRA, but it's where screening disputes often start. Set written screening criteria, such as minimum credit history or income-to-rent ratio, apply them to every applicant, and keep a record of how each decision was made.
6. Tell applicants up front what you check
Say in your listing or application what reports you'll run and what criteria you use. Applicants with a thin or damaged credit file can then decide whether to apply or give you context before you pull the report, which saves both sides an application fee.
Part 4: Applicant Rights Under the FCRA
These are the rights your applicants have. Knowing them tells you what to expect after you send an adverse action notice.
Free copies of their credit report
Everyone is entitled by law to a free report from each of the three nationwide credit bureaus every 12 months through AnnualCreditReport.com. The bureaus currently offer free reports weekly. An applicant who receives an adverse action notice can also request a free copy from the agency that supplied your report, within 60 days. Other situations also qualify for an extra free report, such as being unemployed and looking for work, or believing your file contains errors caused by fraud.
Disputing inaccurate information
If an applicant finds an error, they can dispute it with the agency that issued the report. The agency generally has 30 days to investigate and must correct or delete information it can't verify. The applicant can also add a statement to their file giving their side of the story.
What this means for you: if an applicant disputes something that affected your decision and the report is corrected, you can re-run the report or reconsider the application. You're not required to hold the unit while the dispute is open.
Limits on who can see their report
Only people with a permissible purpose can get an applicant's report. That's why you can screen someone who applied to rent from you, but not someone who only asked about the listing.
Fraud alerts
An applicant who's worried about identity theft can place a one-year fraud alert with any of the three bureaus, which passes it on to the other two. Confirmed identity theft victims can place an extended alert that lasts seven years. If you see a fraud alert on a report, take extra steps to verify the applicant's identity before you approve them.
Examples of FCRA violations by landlords
- Pulling a report without a permissible purpose, such as checking a current tenant's credit out of curiosity or screening someone who hasn't applied.
- Failing to send an adverse action notice after denying an applicant, or after requiring a co-signer or a bigger deposit because of their report.
- Sending a notice that leaves out required information, such as the agency's contact details or the credit score details.
- Using a report for an unrelated purpose, such as a hiring decision for your business.
- Throwing reports in the trash instead of shredding or securely deleting them.
What's in a consumer report
The FCRA defines a consumer report as information from a consumer reporting agency about a person's creditworthiness, credit standing, character, general reputation or way of living, used to decide on things like credit, insurance, employment or housing. A report used for tenant screening typically includes:
- Credit history: payment history, balances, credit utilization and accounts in collections.
- Public records: bankruptcies. The three nationwide bureaus stopped including civil judgments and tax liens on credit reports in 2017–2018, though eviction judgments can still appear on tenant screening reports.
- Personal information: name, current and past addresses, Social Security number and employment history.
- Inquiries: who has requested the person's report recently.
A full tenant screening report can also include a criminal background search and eviction history.
Part 5: FCRA Penalties for Landlords
A landlord who doesn't comply can be sued by the applicant:
- Willful violations: actual damages, or statutory damages of $100 to $1,000 per violation, plus punitive damages and attorney's fees (15 U.S.C. §1681n).
- Negligent violations: actual damages plus attorney's fees (15 U.S.C. §1681o).
- Obtaining a report under false pretenses: this can lead to criminal penalties as well as civil liability.
The FTC and state attorneys general can also take enforcement action. A missing or incomplete adverse action notice is an important and preventable source of FCRA liability for landlords.
Part 6: Tenant Screening Services and Credit Report Access
The three nationwide credit bureaus
These bureaus collect information from lenders, creditors and public records. Most landlords don't deal with them directly. They order reports through a tenant screening service, which also adds criminal and eviction searches.
How to get a screening report with Landlord Studio
Landlord Studio offers TransUnion SmartMove reports, which include a credit report, ResidentScore, a nationwide criminal search and eviction history. Here's how it works:
- Create an account. Sign up for free and add your rental property. If you haven't advertised it yet, create a rental listing and start collecting leads.
- Invite the applicant. Enter their email address. They'll get an email asking them to consent to the screening and enter their own details, so you never handle their SSN.
- Receive the report. It's usually ready within minutes of the applicant finishing. Log in to review it.
- Make your decision. If anything in the report leads you to deny the applicant or approve them on different terms, make sure the applicant gets a complete adverse action notice. If you're not sure whether your screening service sends one on your behalf, send your own using our rental application denial letter template.
Landlord Studio is free for landlords with up to 3 properties. Screening reports are charged per report ($45 on the Pro plan, $55 on the Go plan), and you can pass that cost to the applicant or pay it yourself. See how tenant screening works.
FCRA Compliance Checklist
- You're evaluating a rental application or renewal request, so you have a permissible purpose, and you have the applicant's signed consent on file.
- The report comes from an FCRA-regulated screening service.
- Your written screening criteria are applied the same way to every applicant.
- You sent an adverse action notice for any denial, co-signer requirement, higher deposit or higher rent based on the report.
- The notice is in writing and includes the agency's contact details, the "agency didn't decide" statement, the 60-day free report right, the dispute right and any credit score details.
- Reports are stored securely and shredded or deleted when you no longer need them.
- You've checked your state's tenant screening laws for any extra requirements. Browse by state on our landlord-tenant laws hub, and see rental application fee laws by state.
FAQ
Do landlords need written permission to run a credit check?
The FCRA doesn't require written permission for rental screening. A landlord generally has a permissible purpose when obtaining a consumer report to evaluate a rental application or a tenant's request to renew a lease. Getting signed consent is still best practice, some states and cities require it, and most screening services won't run a report without it.
Do I have to tell the applicant why I denied them?
The FCRA doesn't require you to give your specific reasons, but some states do. Washington, for example, requires a written notice stating the reasons. Under the FCRA, you must tell them which agency supplied the report, that the agency didn't make the decision, and what their rights are, plus credit score details if you used a score.
Can a tenant sue a landlord for an FCRA violation?
Yes. For a willful violation, an applicant can recover actual damages or $100 to $1,000 per violation, plus punitive damages and attorney's fees. For a negligent violation, they can recover actual damages and attorney's fees.
How long should I keep a tenant screening report?
The FCRA doesn't set a retention period for landlords. Keep reports only as long as you have a business reason, such as defending a screening decision, then dispose of them securely under the FTC's Disposal Rule. Check whether your state sets a record-keeping period.
Final Words: FCRA-Compliant Tenant Screening
A missing or incomplete adverse action notice is an important and preventable source of FCRA liability for landlords, so work through the checklist above for every application. Landlord Studio handles the screening side: the applicant gives consent and enters their own details, and you get a TransUnion SmartMove report in minutes.