Bill Introduced in U.S. House to Ban Credit Checks in Tenant Screening

U.S. Representative Maxwell Frost recently introduced H.R.4369, “End Tenant Credit Screening Act,” which referred to the House Committee on Financial Services but has yet to see further action taken.

The proposed legislation seeks to amend the Fair Credit Reporting Act (FCRA) by prohibiting the use of credit checks when evaluating prospective and current tenants. As defined in the legislation, the term “tenant screening purposes” means “report used for the purpose of evaluating a consumer for rental housing, including whether to approve a consumer’s rental housing application, determining the consumer’s security deposit or other terms of the consumer’s lease, or retention a tenant.”

As further outlined in the proposed legislation, whether an individual consents to such a credit check being conducted would be irrelevant. The only scenario where such information could be used would be for “reconsideration of denial”, meaning the housing provider reconsiders an application for rental housing on an individualized basis.

In a press release announcing the legislation, Chi Chi Wu, Director of Consumer Reporting and Data Advocacy at the National Consumer Law Center, was quoted as saying: “Credit scores were never intended to gauge whether someone will be a good tenant. They’re designed to predict whether someone will be late paying a loan, not rent, which is a much higher-priority bill than a credit card. Given the current rental housing crisis, this practice makes a bad situation even worse.”

While the use of credit checks is rather commonplace in the tenant screening industry, there have been efforts on the state, and now federal, level to prevent this information from being leveraged by landlords and property owners. The concern, as cited in the press release, is that this information can be used in a discriminatory way, creating additional burdens for individuals who are trying to find housing. Given the current makeup of Congress, this bill has a significantly low likelihood of being passed. However, it’s important to track this type of legislation to determine what impact, if any, there may be to the screening process.