NEW CREDIT REPORT RULES TAKE EFFECT
JULY 21, 2011
As a part of the massive piece of legislation Congress passed last year to regulate Wall Street and financial institutions is a provision that amends the Fair Credit Reporting Act (FCRA). This change to FCRA potentially affects landlords and their tenant screening processes.
The amendment to FCRA requires disclosure of the credit score to a consumer when person or business takes an adverse action against a consumer based in whole or in part on a numerical credit score. This is a new disclosure requirement and is scheduled to go into effect on July 21, 2011.
The terms “credit score” and “adverse action” are defined in FCRA. The definitions are included in the guidance prepared by NAA and NMHC that is a part of this alert. We urge all owners and property managers to review the guidance carefully and consult with counsel to determine the best course of action to take in light of these new requirements. As pointed out in the guidance, “if you or your screening company use a credit score as defined in FCRA Section 609(f)(2)(A), i.e., one used by lenders to arrange loans, in order to determine renter eligibility, AND, you take an adverse action …then you must provide the new credit score disclosure along with the adverse action notice already required under FCRA."
Click Here to read the Fair Credit Reporting Act in its entirety
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National Multi-Housing Council
NAA/NMHC Guidance: Using Consumer Credit Reports
in the Rental Screening Process
Adverse Action, Risk-Based Pricing and Credit Score Disclosure Obligations
Click Here to read the full report dated July 2011
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Click Here to read Dodd-Frank White Paper
Click Here to read MOCO's Client Message
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