Credit Checks – Fair Credit Reporting Act (FCRA)
Please know that this is not legal advice. It is always recommended to consult a lawyer to ensure you comply with federal, state, and local laws, ordinances, and regulations.
Rental Application – Fair Housing Laws
To manage properties successfully, you must have good tenant screening. In the state of California, there are several laws that your screening process must adhere to. California has some of the most stringent fair housing laws in the country, the Fair Employment and Housing Act (FEHA) and the Unruh Civil Rights Act applicants based on the following:
Religion
National origin or Ancestry
Familial status or Marital status
Disability or handicap, including mental or physical
Sex or Gender identity and gender expression
Arbitrary discrimination
Citizenship, or immigration status
Genetic information
Medical condition
Primary language
Sexual orientation
Military or veteran status
Source of income
Credit Checks – Fair Credit Reporting Act (FCRA)
Now that the tenant has filled out the application, it is time to conduct a credit and background check. You must comply with the Fair Credit Reporting Act (FCRA) when conducting credit checks. The FCRA requires written consent to run the credit check. You must provide the applicant with a copy of the report and adverse action notice if the application is denied based on the credit.
Background Checks – (Fair Chance Act)
When running background checks, you may only use convictions. Misdemeanors cannot go back more than three years. If a case has been sealed, then the tenant does not need to include it on the application.
Verify income and employment
It is important to verify an applicant’s employment and income. You must be careful with this, as you cannot require an applicant to be employed, although they do need to be able to verify their income. As a landlord, it is illegal to discriminate on the source of income. Examples of this would be public assistance, child support, or alimony. Please see my article here. You can ask for pay stubs, letters from employers, or court orders as a proof of income. I would always suggest verifying the source of income and the length of time it is expected.
Check References
It’s a good practice to check the references that are in the application. Call previous landlords, and employers, and check with friends. One of the best ways to authenticate information is to use it incorrectly and see if anyone corrects you. You can get a good idea of whom a tenant is by having these conversations.
Screening tenants is a crucial step in having a successful rental property. By conducting a thorough tenant screening, you’re more likely to find a reliable tenant who takes care of your property and pays their rent on time. Remember, in the state of California, it’s important to comply with fair housing and other laws when screening your tenant. Always screen all of your tenants the same way to avoid any discrimination claims.
Here in the Temecula, Lake Elsinore, Menifee and Murrieta areas at Your Home Imagined, Inc. we use a rental screening service to reduce our risk and create an equal screening process.
References:
Fair Credit Reporting Act – https://www.ecfr.gov/current/title-16/chapter-I/subchapter-F
Fair Employment and Housing Act – https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=GOV&division=3.&title=2.&part=2.8.&chapter=6.&article=2
Unruh Civil Rights Act – https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV§ionNum=51.
Fair Housing and Criminal History – https://calcivilrights.ca.gov/wp-content/uploads/sites/32/2020/04/Fair-Housing-and-Criminal-History-FAQ_ENG.pdf
