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Inaccurate Credit Reporting Stopping Tenants From Getting Housing

Posted by Sami Thalji | Jan 27, 2023

It's not just high prices that renters in the US have to worry about. Recent government reports have shown that many would-be tenants are being disqualified due to mistakes in their background checks. The Consumer Financial Protection Bureau (CFPB) says that companies who do these background checks sometimes make mistakes because of "sloppy procedures" and this leads to higher costs and barriers to renting a home.

The CFPB looked at industry research, case law and more than 24,000 complaints from consumers. Many of these complaints, filed between January 2019 and September 2022, said that private background screening companies had given landlords false, misleading or outdated information about the tenant, which led to them being rejected. These background reports include information like credit history and criminal records and landlords use them to decide whether to rent to someone.

The CFPB Director, Rohit Chopra, said in a statement, "When a company produces a tenant background check report that is riddled with errors, it can cause serious harm to a family seeking housing."

Not only do renters face rejection when they apply, they also lose money on application fees and other costs because of false or inaccurate information in the report. According to the CFPB, 68% of renters have to pay for a background screening to apply for a rental home. These fees vary from place to place, with some cities like New York having a cap of $20 per applicant, but on average, they cost $45 nationwide, according to the credit bureau Experian.

Even though $45 may not seem like a lot, it can add up quickly if someone becomes a victim of background reporting errors. They may have to submit multiple applications without knowing why they were rejected, and many renters don't know that they have the right to a copy of their background report and only find out about inaccuracies after they've missed out on housing opportunities.

Renters can also face other financial consequences when they can't find long-term housing, such as having to spend extra money on temporary housing. The CFPB also found that background checks can break consumer protection laws by not fixing errors quickly. For example, if criminal, arrest or eviction records belonging to someone else are included in an applicant's report, it can be considered a false identity. The Fair Credit Reporting Act (FCRA) says that consumers have the right to have inaccurate information reviewed and corrected within 30 days of filing an objection with the background screening company, but some 4,500 complaints filed with the CFPB said that companies didn't do this.

If you think there may be mistakes in your background report, the first thing you should do is request a copy and review the information. Then, call the screening company and send a written dispute letter by certified mail, explaining the incorrect information and include any documents that support your claim, such as a copy of your ID or birth certificate. You have the right to dispute any false information and the screening company has 30 days to investigate and correct it under federal law. If your claim is approved and the information is corrected within that time, you should ask the company to send the corrected report to anyone who received the original report.

It's important to be aware of your rights as a consumer and to take action if you suspect errors in your background report. These mistakes can lead to serious consequences, such as losing housing opportunities and incurring additional costs. By following the steps outlined above, you can take steps to correct any inaccuracies and ensure that your rights are protected under the Fair Credit Reporting Act.

About the Author

Sami Thalji

Sami Thalji is a native Floridian, born in Clearwater and raised in St. Petersburg, Florida. Sami graduated from Osceola High School in Seminole, Florida before attending and receiving both his Bachelor of Science and Juris Doctor from the University of Florida in Ga...


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