Credit reporting agencies (CRAs) prepare the reports that many landlords use to evaluate a prospective renter’s application.
These reports include information like the applicant’s rental history and credit history.
Landlords who do this must follow guidelines set by the Fair Credit Reporting Act (FCRA), meaning if they decide to reject an application based on information in the report, they must state so.
If you’re a landlord who reports information about your tenants to a CRA, you must also adhere to FCRA guidelines.
What Constitutes a CRA?
While Experian, TransUnion, and Equifax are the most well-known agencies, CRAs also include tenant screening organizations, check verification businesses, and even medical information services.
A CRA is any agency that gathers data to help a business analyze consumers.
When you habitually submit information to a CRA, the organization must send you an explanation of your responsibilities.
These responsibilities include:
- Submitting information that is accurate. If you submit information you know is wrong or consciously avoid uncovering information, you’re violating the FCRA. The sole exception is if you have given your tenants a clear and conspicuous address for dispute notifications. Clear and conspicuous means any rational tenant would easily find it. Putting the address in tiny print on the back of a letter does not meet the standard.
- Updating information as soon as possible. If you discover you have a wrong forwarding address on file, your responsibility is to submit the correct data to each CRA you report to. Do not use the inaccurate information again.
- Keeping CRAs in the loop. After a tenant submits official notice of a dispute with information you have submitted, you can still report that information to other CRAs; however, you must also inform the CRAs that the data is under dispute. If it is found to be inaccurate, you are responsible for reporting only the accurate information from then on and for updating it as soon as possible.
What to Do When a Tenant Dispute Occurs
If you’ve received notification from a CRA that information you’ve submitted is under dispute, your responsibility is to research the dispute, including the information the CRA provided.
Inform the CRA of your conclusions.
If you find the information under dispute is, in fact, inaccurate, you must submit the correct data to any other national CRAs you supplied the information to.
You generally have 30 days to investigate and report, and if necessary, update information.
You get deadline extensions if the tenant provides new information during the process.
If you do not investigate the dispute, the information under dispute is removed from the CRA’s files.
What to Do When Reporting Delinquent Payments
When you report missed tenant payments that have been turned over to collections or charged as a loss, you have 90 days to furnish the month and year of the delinquency.
CRAs use the dates when they calculate how long they keep that negative information in a person’s file.
It can be tricky to calculate the date of a delinquency, but the following examples should help.
- If your tenant stopped making payments on April 15, 2012, but you didn’t turn the account over to a collections agency until October 1, you still mark April 2012 as when the delinquency occurred.
- Your tenant paid half the monthly rent starting in March 2012 until you put the account into collections in October 2012. Because the account was never current starting with March, the delinquency date is March 2012.
As a general practice, it's a good idea to act as honestly and as responsibly as you can.
Avoid reporting information you know is wrong or that you cannot verify.
Meet all deadlines, keep everyone updated, and you should be able to meet all your legal obligations without any trouble.
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