Landlords in the United States almost always engage in some form of screening for rental applicants. This screening often involves reports or scores purchased from specialized tenant screening consumer reporting agencies (CRAs). The reports typically combine information about eviction filings, criminal records, and credit history. Often the reports include a score or recommendation based on these records, and in some cases, the score or recommendation is the only information conveyed to the landlord.
Each of the components of tenant screening reports is highly problematic and also creates a disparate impact on Black and Latino renters. The manner in which the components are combined to generate scores or recommendations, and then used by landlords, is also harmful to renters. These comments discuss some of the most significant problems with tenant screening, including:
- Heavy reliance on scores and recommendations. Landlords often make leasing decisions based solely on these scores or recommendations, rather than the underlying information. In a survey of attorneys, advocates, and counselors who assist renters, 46% of respondents said private landlords rarely or never reviewed the underlying information in a tenant screening report. Subsidized housing providers were a bit better, with only one-third of respondents reporting that these providers rarely or never reviewed the underlying information.
- Lack of transparency of screening criteria. Many landlords fail to inform applicants of their criteria for selecting tenants, creating a lack of transparency in the tenant selection process. For private housing, the majority of respondents to the NCLC survey said that landlords disclosed screening criteria rarely (50%) or never (13%). Subsidized housing providers were better about disclosure, likely because they are required to have and disclose admission policies. Lack of transparency is especially harmful when renters apply for and waste money on application fees when they are ineligible for a rental unit according to the landlord’s undisclosed criteria.
- Failure to consider mitigating information or additional context. Respondents were asked several questions about whether landlords considered the following factors when screening tenants: personal hardship/extenuating circumstances; additional context regarding eviction actions; and outcome of eviction actions.
- For private housing, landlords are unlikely to consider mitigating factors. Most respondents reported that landlords rarely (54%) or never (24%) considered personal hardship/extenuating circumstances. About three-quarters of respondents reported that private landlords do not consider additional context or the outcome of evictions either on their own or when an advocate intervenes, or they rarely or never consider such information.
- Subsidized housing providers appear to consider personal hardship/extenuating circumstances more often, with half of respondents reporting that these providers were usually (12%) or sometimes (34%) willing to consider these factors. About half of respondents reported that subsidized housing providers will consider additional context or outcome of an eviction when an advocate intervenes.
- Disputes are ineffective. Disputing information in tenant screening reports is mostly ineffective to impact landlord decisions. Respondents reported that the most common response of landlords to a dispute (86% reported observing) was to ignore the existence of the dispute and reject the renter.
- Criminal records are not predictive, are often inaccurate, perpetuate racial disparities and undermine state policy. Over half (54%) of respondents reported observing a conviction or charge that was dismissed, dropped, or reversed on appeal creating a barrier to renting. Respondents also observed criminal records being reported on the wrong consumer’s report (43%); reporting of sealed, expunged, or set-aside convictions (41%); reporting of arrests older than seven years (50%); the same criminal record appearing multiple times on a report (19%); and misclassification of offenses (26%). Yet empirical research does not establish that criminal records are predictive of success as a tenant, while their use perpetuates serious racial disparities and undermines state policies to remove barriers for people with criminal records and their families.
- Eviction records are plagued with inaccuracies and racial disparities. Respondents reported seeing problems with eviction records being reported on the wrong consumer’s report (47% of respondents); reporting of sealed or expunged records (31%); missing or incorrect dispositions/outcomes (76%); evictions older than seven years (53%); reporting evictions where the tenant prevailed (81%); and mischaracterized evictions (62%). Eviction records also exhibit racial disparities; an ACLU study found that landlords file eviction cases against Black tenants at twice the rate of white tenants.
- Use of credit reports and scores is widely prevalent but problematic. The vast majority of respondents to the NCLC survey reported observing the use of credit scores to deny applicants for private housing (84%); for voucher holders in the private market (65%); and even in subsidized housing (40%). Yet credit scores are designed to predict only whether a borrower will be late on a loan obligation, and there is no evidence of its predictiveness for rent payments. Credit reports have unacceptably high error levels, and there are large and troubling racial disparities with credit scores.
- Failure to provide adverse action notices. There is significant noncompliance with the adverse action notice requirement of the Fair Credit Reporting Act (FCRA). The FCRA requires landlords to provide a notice when they reject a renter on the basis of a tenant screening or credit report. For private housing, nearly half of respondents reported that adverse action notices were provided rarely (34%) or never (14%), with a third (34%) reporting they were provided only sometimes. Subsidized housing providers appear to provide notices more often, with only a minority of respondents reporting that they observed such providers giving them rarely (16%) or never (2%). Subsidized housing providers are also more likely to give a statement of reasons for rejecting an applicant. Both private and subsidized housing providers are unlikely to provide copies of information they receive about an applicant.
- Scant and inconsistent language assistance. NCLC survey respondents observed little language assistance is offered for the 8.2% of the U.S. population who are limited English proficient. Most respondents observed that there was no assistance by private landlords (79%) or subsidized housing providers (55%), despite federal requirements for certain subsidized housing providers. A minority of respondents observed bilingual staff employed by private landlords (17%) and subsidized housing providers (34%), but there was significant turnover for these employees.
Given the significant and widespread problems with tenant screening, we recommend that the FTC use its unfairness authority under Section 5 of the FTC Act to promulgate regulations governing the use of tenant screening by landlords. We recommend that the CFPB, which has announced it will undertake an FCRA rulemaking, to include provisions addressing the inaccuracies and problems of tenant screening documented in these and other comments, as well as the Bureau’s own reports and research. Both FTC and CFPB should undertake enforcement actions for violations of the FCRA and empirical research into the error rate and predictiveness of the information used by tenant screening CRAs. Detailed recommendations are in Section VIII of these comments.
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