Survey Finds a Heavy Reliance on Scores, Inaccurate Records, and an Ineffective Dispute Process Plague Tenant Screening Industry
WASHINGTON – Landlords in the United States almost always engage in some form of automated screening of rental applicants. A new report from the National Consumer Law Center explains that the screening process is riddled with errors and bias that disproportionately harms Black and Latino/Hispanic renters.
Digital Denials: How Abuse, Bias, and Lack of Transparency in Tenant Screening Harm Renters looks at the significant and often insurmountable barriers to decent, affordable housing that tenant screening creates for millions of renters.
“Tenant screening scores and recommendations create a misleading veneer of objectivity while concealing underlying racial disparities,” said Ariel Nelson, staff attorney at the National Consumer Law Center. “Landlords frequently make leasing decisions based solely on these tenant screening scores and recommendations, and our research reveals that they are unlikely to hear disputes or to consider mitigating factors.”
Tenant screening often involves reports or scores purchased from specialized tenant screening consumer reporting agencies (CRAs). CRAs typically rely on automated tools (which may use artificial intelligence) instead of human decision makers, and they claim that their tools help eliminate bias. However, research indicates that these tools instead worsen discrimination in housing, because errors and racial disparities exist in the eviction filings, criminal records, and credit history that are fed into the algorithms to generate the scores as well as to “train” the models.
“There’s absolutely no evidence that credit scores have value in predicting whether a renter will pay their rent. Credit scores are designed for one thing only – to predict whether a consumer will be late on a loan,” said Chi Chi Wu, senior attorney at the National Consumer Law Center. “And there are huge racial disparities in credit scoring, which means their use makes it harder for Black and Latino/Hispanic renters to obtain rental housing.”
“The manner in which tenant screening CRAs combine criminal records with other components to generate scores or recommendations similarly perpetuates serious racial disparities,” said Caroline Cohn, Equal Justice Works Fellow, sponsored by Nike, at the National Consumer Law Center. “It also undermines state policies designed to remove barriers for people with criminal records and their families.”
To obtain detailed information about the effects of tenant screening, NCLC conducted a survey of attorneys, advocates and counselors, developed in consultation with the National Housing Law Project.
The results highlight some of the most significant problems with the use of credit reports and scores in tenant screening, including eviction records that are plagued with inaccuracies and racial disparities, a lack of transparency in screening criteria, and ineffective dispute resolution processes.
“Not only did a high percentage of survey respondents report errors, they reported that disputing the errors had no impact because the landlords ignored the disputes and rejected renters without further consideration,” Nelson added.
When coupled with a nationwide affordable housing shortage, tenant screening can force renters into substandard yet more expensive housing – or even render them homeless.
The report recommends actions the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), Congress, and states can take to rein in the tenant screening industry and secure renters’ access to decent and affordable housing.
- Comments on Tenant Screening Request for Information by FTC and CFPB, May 30, 2023
- Mission Creep: A Primer on Use of Credit Reports & Scores for Non-Credit Purposes, August 2022
- Zombie Records: How Sealed or Expunged Court Records in Tenant & Employment Screening Reports May Illegally Cost People Jobs & Housing, June 29, 2022
- Salt in the Wound: How Eviction Records and Back Rent Haunt Tenant Screening Reports and Credit Scores, Aug. 1, 2020
- Broken Records Redux: How Errors by Criminal Background Check Companies Continue to Harm Consumers Seeking Jobs and Housing, December 2019