Checking the credit score of a potential renter has been a common practice in tenant screening, as it shows the financial responsibility and stability of an applicant. While landlords are entitled to this information, they are still legally obligated to follow certain landlord-tenant laws to protect applicants. What exactly are the requirements you’re supposed to follow?
Obtaining Written Consent
The Fair Credit Reporting Act (FCRA) prohibits landlords from checking an applicant’s credit without written permission, which means that you are required to provide a consent form for them to sign. Applicants are entitled to deny your request, which also grants you the right to reject their application. When a consent form has been signed, it’s good practice to keep that form in case of disputes or audits.
Screening Fee Limitations
California law has prohibited landlords from charging more than $62.02, as of December 2023. Furthermore, the fee should reflect the actual cost of the credit reports you’re accessing. Should you charge for the effort of doing the work, the amount must be reasonable. Charging more than the maximum amount set by the state can lead to legal consequences, which can cost you a lot more.
Providing an Itemized List
Since landlords and property managers are required to be transparent about the costs of credit reporting, they must provide an itemized written receipt detailing all the expenses. If the landlord failed to use the credit report for the application process, the applicant is entitled to a refund and a copy of the credit report, should they request it.
Reusing a Credit Report
The applicant may submit an existing credit report if it has been created within a 30-day period. You are not allowed to charge them again for acquiring a new credit report or an application screening fee. You can have them sign a consent form to get another copy, but you will be covering the costs for it.
Sending an Adverse Action Notice
In the event that you deny an applicant, require a co-signer, or increase the security deposit amount based on the credit report, you are required to send a written Adverse Action Notice. It should contain the name, address, and phone number of the credit reporting agency used, and state that the agency did not make the decision. The Fair Credit Reporting Act also states that you must outline the reason why the notice was sent.
What Is The Minimum Credit Score in San Diego?
There is no specific number for a credit score in San Diego, California. However, you consider a common benchmark to avoid issues with payment and rental income. Most landlords usually use 650 to 700 as a baseline, while others who own luxury rental properties require higher scores. If a tenant with a low credit score requests an alternative, you can always ask for a higher security deposit or proof of savings.
Take the Stress Out of Tenant Screening
Screening tenants thoroughly ensures that your rental property is protected and your income is stable. Poor screening often leads to bad tenants who won’t respect your lease rules or take care of your property.
Still, there are limitations to how strict you can be with screening criteria, given the landlord-tenant laws that protect both property owners and potential tenants. If you don’t want to deal with this aspect of property management, there are services you can always hire.
Investment Safe Property Management can conduct screening for all while abiding by the necessary local and state laws. To us, the right tenant is better than a fast tenant. We even go beyond normal screening practices by taking a comprehensive look at the overall applicant.
Let us take over the hard parts of your property management duties. Contact us and learn more!