Screening Credit report For Rental

The following article was supplied by Rebekah Near from Orca Coummunications. She can be reached at: rebekahn@orcainfo-com.com

John Parker
Willow Properties
Property manager since 1973
NARPM member since 1996

LANDLORDS CAN’T GET CREDIT REPORTS?
There is a rumor going around that the “individual landlord”
can no longer get credit reports for the purpose of screening potential
tenants. This rumor is false. The truth is a landlord now
has to work harder to obtain a credit report. Gone are the days
when you can fax a request to your favorite screening service and
receive a credit file on a prospective tenant. The consumers have
complained, and moaned and groaned long enough and loud
enough to successfully make it more difficult, and in some cases
next to impossible for anyone to obtain their personal credit file.
Blame it on personal privacy and identity theft, blame it on unnecessary
fears held by the public, blame it on Homeland Security.
Whatever you blame it on the bottom lime is that now there
are “more rules” for a landlord to follow.
The new rules also created a lot more work for everyone involved
so now the credit reports are more expensive. So, who has
to pay out of pocket for the cost of this “extra security” on their
personal financial information? The consumer, your rental applicants
are the ones that have to pay.
The Bad News:
In response to tougher laws in the Fair Credit Reporting Act
(FCRA) the major credit bureaus (Trans Union, Experian, Equifax)
tightened up their policies on who can access credit reports.
They are the ones that won’t allow you to receive credit reports
unless you comply with the following directives:
1. Get a Washington State Business License for the purpose of a
rental business and have a UBI#.
2. If you operate the rental business from your home there must
be an office space that is separate from the living quarters.
3. An “Onsite Inspection” of your home-office is required. Two
of the major credit bureaus require the Onsite Inspection to be
done by an outside third party that they have pre-approved. Only
Trans Union allows your screening service to do their own Onsite
Inspections. Oh yes, it does cost money!!! The going rate for an
Onsite Inspection is from $65.00 to $125.00.
4. Fill out new and/or additional paperwork committing to following
the rules laid down by the FCRA and the major credit
bureaus.
The Good News:
For the landlords that choose not to make the changes described
above there are some alternatives to receiving a credit report from
your screening service. Some screening services offer a financial
“grade” or “scoring” in lieu of a credit report. After many hours
of studying the different options a screening service can offer a
landlord under the new restrictions to credit files I believe there is
a better choice than the “grade” or “scoring”. I call it an
“Alternative Report”.
The “Alternative Report”
1. Ask your rental applicant(s) to bring in a current copy of
their credit report - preferably no older than one or two weeks.
Here is how: By law everyone is entitled to one FREE copy of
their credit report annually from each major credit bureaus
(Equifax, Trans Union, Experian). However, your applicant
must order from the correct website: www.annualcreditreport.c
om or call their toll free number, 877-322-8228. Again, there
is no charge IF they ordered correctly and only from this site
and or phone number. If they want to purchase a credit report
the cost is reasonable. Each credit bureau has their own website
where they may purchase a report as well.
2. Upon review of their credit report - you can decide if you
want to continue with the screening. If you decide that an applicant
with a certain level of negative credit—apartment collections,
unpaid judgments and/or tax liens etc. no longer
qualifies for the apartment then:
a. Make note on their file of your decision not to rent,
what part of their credit was derogatory, and any other details
regarding your decision not to rent to them based upon their
credit information
b. Return the credit report to them
c. Explain why they no longer qualify for the unit
d. Hand them a copy of the Consumer Rights Letter
(required by law) and thank them for their time
or
Continue the Screening Process
3. Send your screening service the completed rental application.
Make sure you ask your screening service to provide the
following type of information:
a. In lieu of the credit report - validation of the applicant
(s) identity such as: confirmation of name, Social Security
number, date of birth, and AKA’s, plus addresses where they
have lived an other pertinent demographic information.
b. All other desired information that you have previously
received such as court records - criminal and civil including
evictions as well as rental and employment references.
A private landlord/investor can still receive a good background
investigation on their prospective tenants. They just
need to be a little more “savvy” and willing to make some
changes.
By, Rebekah Near, CEO of Orca Information, Inc.