Renters' Rights: The Basics

Your Credit Report Can Make or Break Your Application

For many landlords, credit reports are a litmus test that show how responsible you have been managing money. Like it or not, your financial history is a powerful indicator of whether you will be a reliable tenant who pays rent on time and is not likely to cause problems. A landlord can legitimately turn you down for a bad credit report.

Fortunately, there are some restraints on the method of collecting and reporting on an individual's credit history. The Fair Credit Reporting Act (15 U.S. Code §§ 1681 and following) covers all aspects of credit reports, including your access to your file, right to dispute information in it and steps you can take to correct inaccurate reporting. It also regulates investigative background reports, including your right to be told that such a report has been requested. Some states have their own laws that give consumers more protections.

1. What's in Your Credit Report

Credit reports show your credit history for the past seven years, including whether you have ever been:

• late paying rent or bills, including student or car loans
• convicted of a crime or, in many states, even arrested
• evicted from a rental unit, or
• involved in another type of lawsuit, such as a personal injury claim.

A credit report will also state whether or not you have filed for bankruptcy in the past ten years.

If you've never borrowed money or used a credit card, the report will have large blank spaces which would normally be filled with a consumer's history. Ironically, a landlord may refuse to rent to you because you don't have a good history of debt management, even if you have been a fastidious on-time, cash-only consumer! The landlord will be worried that the first time you encounter lean times might be when the rent is due -- and he has no way of knowing whether, if this happens, you'll be able to put your rental obligation at the top of your list. (See Section B, below, for advice on how to deal with this situation.)

2. Verify Credit-Check Fees

Landlords can charge a fee for the cost of the credit report itself and their time and trouble to order it and read it -- $20 or $30 is common. You can call the credit bureau to verify the actual cost of getting a report. Some states regulate how much the landlord can charge (call your state's consumer protection agency to find out if your state has set a limit). If the landlord has charged an unreasonable amount, you can report him to that agency. (See Appendix 2 for state-by-state listings.)

3. Your Right to a Refund of a Credit-Check Fee

Some unscrupulous landlords collect credit-check fees but never run a credit check, pocketing the money instead. If your landlord has done this, you're entitled to a refund. If you suspect this illegal behavior, contact a credit reporting agency as soon as you've been rejected by a landlord to see whether or not the landlord actually requested your report. If he didn't, ask for your money back; and if you get no results, contact your state's consumer protection office.

If a credit report was ordered and you decide not to take a rental unit or the landlord chooses someone else, you are not entitled to a refund.

4. Your Right to Know When Your Credit Report Does You In

A landlord who does not rent to you because of negative information in your credit report is legally required to give you the name and address of the credit agency that reported the negative information. He must also tell you of your right to a free copy of your file from this agency.

5. Why and How to Check Your Credit Rating

Because your credit report is so important, you should always check it before you start your housing search. This will give you the opportunity to correct or clear up any mistakes, such as out-of-date or just plain wrong information. It's all too common for credit bureaus to confuse names, addresses, Social Security numbers or employers. Especially if you have a common name (say John Brown), chances are good you'll find information in your credit file on other John Browns -- or even John Brownes or Jon Browns. Obviously, you don't want this incorrect information given to prospective landlords, especially if the person you're being confused with is in worse financial shape than you.

Looking for inaccurate information isn't the only reason to check your credit report. If your report contains accurate but damaging information, it's better that you know exactly what it says before your prospective landlord sees it. Seeing it first enables you to anticipate an objection and formulate an explanation, which will better your chances of convincing the landlord that your financial troubles are all in the past.

Copy your own credit report and save on credit check fees. If you're applying for more than one rental, you'll find that credit-check fees (at $20 or $30 a pop) mount up quickly if every landlord orders a report. Get your own credit report and make several copies to give landlords when you apply for a rental. While landlords may want to order your credit report directly (some may fear that you're doctored your copy), it's worth a try.

6. How to Handle Errors (Not Your Fault) in Your Credit Report

If you see entries in your report that are wrong, take action. Contact the reporting bureau and ask for an investigation form. On the form, list each incorrect item and explain why it's wrong. Under federal law, the credit bureau must investigate within 30 days (in some states, it's less). If the investigation confirms that you are right (or if the creditor who provided the information can no longer verify it), the bureau must delete the information from your file.

Unfortunately, a request for an investigation does not always right the situation. If the credit reporting agency fails to remove inaccurate or outdated information, lists a debt you refused to pay because of a legitimate dispute with the creditor or reports a bogus lawsuit against you that was abandoned, you have the right to place a 100-word statement in your file, giving your version of the situation. Be sure to submit such a statement immediately if your situation fits one of the above descriptions. In addition, you can contact the Federal Trade Commission to complain about the inaccuracies. Check the government section of your phone book or call the national office at 202-326-2222.

Keep in mind that if one credit bureau has inaccurate information on you, it's likely that others do too. If you find errors in your report from one credit bureau, be sure to check your files at the other two agencies.

7. How to Deal With Problems (Your Fault) in Your Credit Report

If your credit file shows negative but accurate information, or you have no credit history because you're a first-time renter and have never borrowed money or used a credit card, there are steps you can take to look better to prospective landlords.

• See if your landlord will accept a co-signer -- a creditworthy person who signs the lease or rental agreement and agrees to cover any rent or damage-repair costs you fail to pay. Keep in mind that the landlord will evaluate the co-signer with the same criteria he used for you -- so your willing but broke college buddy isn't likely to be accepted.
• Pay a large security deposit, or offer to prepay rent for several months. (Chapter 4 discusses security deposits and state limits.)
• Show proof of steps you've taken to improve bad credit -- for example, your enrollment in a debt counseling group, your recent history of making and paying for purchases on credit and your maintenance of a checking or savings account.
• Get positive references from friends, colleagues, employers and previous landlords.

For a detailed description of how to obtain a credit report and challenge its contents, and for information on your state laws, see Money Troubles, by Robin Leonard (Nolo). For suggestions on how to re-establish your good credit, see Credit Repair, by Robin Leonard (Nolo).

References Are All-Important

Your past relationships with landlords, managers and employers can make the difference between getting a rental unit and getting rejected. Prospective landlords will usually want to talk with your current and previous landlords, your employer and friends. Here's what they'll typically ask:

From other landlords and managers:

• Did you pay rent on time?
• Were you considerate of neighbors (no loud parties, out-of-control kids or dangerous dogs)?
• Did you make unreasonable demands or complaints?
• Did you take good care of the rental unit?

If your landlord says you were a pain in the neck, always paid rent late and left the place a shambles, don't expect the next landlord to welcome you with open arms.

From your boss:

• How long have you worked at this job and how much money do you make?
• Are you a responsible person?
• Do you have any serious character flaws or weaknesses?

From friends:

• Character references from people (non-relatives) who know you well and can attest to your reliable, honest nature, good housekeeping habits and consideration for others.

A landlord can't force you to name names. And you may not want to, particularly if your current landlord or boss is a complete jerk and will have nothing good to say about you.

But unless you can come up with a good substitute -- another supervisor or maybe a resident manager -- a prospective landlord will conclude that you're withholding the name because you're afraid of what the person might say. If you really can't come up with some names, at least have a reasonable explanation for your reticence.

Many past landlords and employers won't talk to your prospective landlord unless they have a signed release from you stating that it's okay to answer the prospective landlord's questions. In this litigious society, many landlords are afraid that you'll sue them for defamation or the invasion of your privacy. This written permission assures your previous landlord, current employer, credit sources or personal references that you won't object if they respond truthfully to a landlord's relevant questions about your work and employment history. For this reason, many prospective landlords will ask you to sign a release.

Smart Moves: How to Find a Good Place

Knowing what questions landlords are legally allowed to ask and preparing for them will give you confidence as you head into your rental search. But your success will also depend on some "street smarts," not just legal know-how. Here's some proven strategies that will make your efforts more efficient and successful:

Set your rental priorities before you start looking -- the rent, desired location, number of bedrooms and whether you want to keep a pet. This will help focus your search. You don't want to drive yourself crazy running around looking at inappropriate places.

Sign up with an apartment-finding service. Expect to pay a flat fee, such as $50 to $100 for a one-month membership, providing a centralized listing of rental units for a particular geographic area. (Be aware, however, that in areas such as San Francisco and New York City, where the rental market is extremely tight, the service may well be very expensive, tied to the monthly rent of the apartment you choose.) If you have e-mail or access to a fax machine, look for a service that will deliver daily updates of available rental units this way. Otherwise, you'll need to stop by the company's office to check out listings. Some apartment-finding services provide roommate referrals and some agencies specialize in this exclusively -- check the Yellow Pages under "Roommate Assistance" or "Referral Services."

Use your personal contacts. Get leads from people who live or work near where you want to live. Don't be shy -- ask friends, co-workers, even local businesspeople with whom you have a friendly relationship. You never know who may come through with the perfect apartment -- it might be the receptionist at work, your dental hygienist or a waitress at your favorite restaurant.

Check classified ads early in the day, especially in the Sunday paper. Some newspapers issue their Sunday paper with classifieds early -- even a day early. Also, many newspapers have their classified ads available online.

Work with a real estate broker or property management firm. If you're moving to a new city, these may be your best options. Be sure to check out fees. In New York City, where many property owners list their rentals exclusively with real estate brokers, you can expect to pay a fee that is tied to the rent (for example, 15% of the first year's rent) or a flat fee of $1,000 or more for a rental.

Check out university and corporate housing offices. Professors leaving on sabbatical and corporate employees who are temporarily transferred are often anxious to rent their homes for a year or more. University housing services and corporations sometimes maintain databases to help them in their leasing efforts.

Go online. Post your own "Apartment Wanted" notice on a site that permits personal messages, or check out an online rental service such as Rent.Net (www.rent.net), which lists over one million rental units.

Hit the streets. Walk or bike around the neighborhood you want to live in and look for "Apartment for Rent" signs in windows or notices on local bulletin boards. These rentals can be great finds -- especially if they're not advertised in the paper, reducing the competition. If you want to live in a particular apartment building or complex but there's no sign posted, stop and talk to the manager or doorman. Get on a waiting list, if possible.

Advertise your rental search. Consider posting your own "Apartment Wanted" sign (and maybe even offer a finder's fee) in a local store, health club or other business; or put a classified ad in a newspaper or newsletter.

Try not to compromise. If you can at all help it, don't move into a place that's a complete disaster, next to a drug house or run by a landlord who is well known by the housing inspectors and the local legal aid office. Even if you consider it temporary, try not to settle for a questionable place. Keep looking.

Take your time. Unless you're positive that you've found your dream rental (and there's eager would-be tenants lined up behind you), don't commit yourself on the spot. Take some time, even a few hours, to think about it. Were there any little, nagging misgivings that need to be faced and resolved? For example, what about the manager's off-hand remark about his tenants' private lives that, viewed in retrospect, may spell trouble ahead? Often a return visit, or candidly sharing your doubts with a wise friend, can bring important issues to the fore. You don't want to look back later and say, "I should have seen it coming."

How to Impress Prospective Landlords

To gain a competitive edge over other tenants, bring a completed rental application when you first meet prospective landlords. Ask for a copy before you go, use the form from Nolo's Every Tenant's Legal Guide (by Janet Portman and Marcia Stewart) or simply bring the following information:

• Written references from landlords, employers, friends and colleagues. If that's not possible, be sure to bring a typed list of current phone numbers and addresses. It's always a good idea to alert references to expect a call from prospective landlords. And make sure they'll speak well of you.
• A signed release from you giving permission to these references to answer the landlord's relevant questions.
• A current copy of your credit report. You can order one from any of the major credit bureaus (see Credit Bureaus, above). It usually takes about two weeks.

Be on your best "good tenant" behavior. Show up on time, dress neatly and present yourself as someone who is both conscientious and agreeable. Realize that landlords hate dealing with overly demanding or fussy tenants who constantly complain about trivial things, so don't start off asking for a long list of improvements and special favors before you're even offered the place.

To clinch the deal on a great place, you may need to sweeten the pot -- for example by offering to pay more rent or a higher security deposit. Be aware of the possible downsides of this strategy. (See "Greasing the Wheels Can Get Messy," below.)

Introduction

Looking for a place? No problem -- with money, gr references, no pets, not too many roommates -- it's a breeze!" If your reaction to this line is "Unfortunately, that doesn't describe me," read on. You don't have to be wealthy or squeaky clean to get the rental you want -- just savvy.

The good news. Thanks to federal and state anti-discrimination laws, landlords are limited in what they can say and do when selecting tenants. Basically, unless a landlord has a legitimate business reason for turning you down, she risks running afoul of these laws, which can spell big legal trouble for her. Because anti-discrimination laws are so important, we devote a whole chapter to them -- Chapter 5.

The sobering news. Aside from complying with anti-discrimination laws, landlords have a lot of leeway in choosing tenants. Landlords are legally free to chose whomever they think will be the best, most stable tenant -- ideally, someone who pays the rent on time and won't cause any problems.

Since landlords can choose tenants based on their likelihood of being "maintenance-free," applicants with a shadow or two in their past (a bad reference, a few late rent payments) or a shaky present (low income relative to the monthly rent) need to know how to anticipate -- and head off -- the landlord's hesitations before they solidify into a "No." And if you live in a tight rental market -- like New York City or San Francisco -- you'll need to be fast, persistent and street-smart to score a reasonably priced rental.

This chapter alerts you to the main factors landlords consider when choosing tenants, such as credit reports and references, and gives advice on how to improve your chances of getting a place you like -- and can afford.