Tenant Screening

Tell every prospective resident up front that in order to rent from you, a thorough investigation will be done.

Tell every prospective resident what the non-refundable processing fee (if you charge your applicants for the background check) pays for. By law (RCW 59.18063), if a receipt is required one must be given. RHA recommends, a credit bureau report, and a civil and criminal records check. Washington law allows you to pass along only the actual costs of obtaining the screening (RCW 59.18.257).

The prospective resident must sign a disclosure form, which legally allows you to investigate their credit and character. (If you use RHA’s rental application form, the disclosure statements are at the bottom.) You MUST have the resident signature allowing you to pull a credit report and obtain references! (RHA Rental Applications are compliant)

Treat every prospective resident the same. When in doubt, be careful. It may save you from a discrimination lawsuit. Remember, applicants and even your own tenants compare notes. Comply with the Fair Credit Report Act disclosure requirements for any application you deny based on their credit report or information from their credit report. Therefore, if you deny a tenant based on their credit report you must provide the tenant with an adverse action letter.

Fair Credit Reporting Act

603 Definitions

604 Permissible purposes of consumer reports

615 Requirements on users of consumer reports

Section 603 (k) Adverse Action

(1) Actions included. The term "adverse action"

(A) has the same meaning as in section 701(d)(6) of the Equal Credit Opportunity Act; and

          (B) means

(i) a denial or cancellation of, an increase in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount of, any insurance, existing or applied for, in connection with the underwriting of insurance;

(ii) a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee;

(iii) a denial or cancellation of, an increase in any charge for, or any other adverse or unfavorable change in the terms of, any license or benefit described in section 604(a)(3)(D) [§ 1681b]; and

(iv) an action taken or determination that is (I) made in connection with an application that was made by, or a transaction that was initiated by, any consumer, or in connection with a review of an account under section 604(a)(3)(F)(ii)[§ 1681b]; and (II) adverse to the interests of the consumer

604. Permissible purposes of consumer reports [15 U.S.C. § 1681b]

(a) In general. Subject to subsection (c), any consumer reporting agency may furnish a consumer report under the following circumstances and no other:

(2) In accordance with the written instructions of the consumer to whom it relates.

(3) To a person which it has reason to believe

(A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer; or

(F) otherwise has a legitimate business need for the information

(i) in connection with a business transaction that is initiated by the consumer; or

(ii) to review an account to determine whether the consumer continues to meet the terms of the account.

615. Requirements on users of consumer reports

(a) Duties of users taking adverse actions on the basis of information contained in consumer reports. If any person takes any adverse action with respect to any consumer that is based in whole or in part on any information contained in a consumer report, the person shall

(1) provide oral, written, or electronic notice of the adverse action to the consumer;

(2) provide to the consumer orally, in writing, or electronically

(A) the name, address, and telephone number of the consumer reporting agency (including a tollfree telephone number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis) that furnished the report to the person; and

(B) a statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken; and

(3) provide to the consumer an oral, written, or electronic notice of the consumer’s right

(A) to obtain, under section 612 [§ 1681j], a free copy of a consumer report on the consumer from the consumer reporting agency referred to in paragraph (2), which notice shall include an indication of the 60-day period under that section for obtaining such a copy; and

(B) to dispute, under section 611 [§ 1681i], with a consumer reporting agency the accuracy or completeness of any information in a consumer report furnished by the agency.