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Credit Checks in The Rental Application Process

The Bay Area is home to one of the most competitive rental markets in the country. It is not uncommon to hear that multiple applications have been submitted between competitive renters vying to find a new place to call home. Although a number of factors are weighed by landlords in deciding who will rent their home or apartment, a major factor in today’s market is the applicant’s credit score. Landlords often use an applicant’s credit score in order to view both financial responsibility and past landlord-tenant relationships. A credit report generally states whether a person has been reported as being late in paying bills, has been the subject of an unlawful detainer lawsuit, or has filed bankruptcy.

Below are some of the major laws affecting the use of credit reports in the rental application process.

Landlord’s Application Fee

Generally landlords will charge a fee for obtaining information on the prospective applicant, and generally the cost of obtaining a credit report falls within this fee. This fee is often referred to as an “application fee.” California Civil Code Section § 1950.6 governs the use of application fees in obtaining application information. Listed below are some important aspects of the section that landlords are required to abide by:

  • The amount of the application screening fee shall not be greater than the actual out-of-pocket costs of gathering information concerning the applicant, including, but not limited to, the cost of using a tenant screening service or a consumer credit reporting service.

  • The landlord or his or her agent shall provide, personally, or by mail, the applicant with a receipt for the fee paid by the applicant, which receipt shall itemize the out-of-pocket expenses and time spent by the landlord or his or her agent to obtain and process the information about the applicant.

  • If the landlord or his or her agent does not perform a personal reference check or does not obtain a consumer credit report, the landlord or his or her agent shall return any amount of the screening fee that is not used for the purposes authorized by this section to the applicant.

Refusal To Rent Based On The Credit Report

Given the weight that credit reports play in today’s rental market, it is no surprise that landlord’s often base their decisions to refuse to rent to an applicant based on the information obtained from a credit report. Generally, a landlord is not required to disclose why he or she refused to rent a property to an applicant. An exception to this rule comes into play when the refusal was based solely or partly on an applicant’s credit report.

California Civil Code Section § 1785.20 states that when a landlord’s refusal to rent is based solely or partly on negative information obtained from a credit report, the landlord must give the applicant written notice including the following items:

  • The decision was based partly or entirely on information in the credit report; and

  • The name, address, and telephone number of the credit reporting agency; and

  • A statement that you have the right to obtain a free copy of the credit report from the credit reporting agency that prepared it and to dispute the accuracy or completeness of information in the credit report.

Benefits Of Obtaining Your Credit Report

Although a denial to rent a property based on a credit report may initially come as bad news, a few important benefits can be derived from the landlord’s decision. First, it is always a good idea to obtain a copy of the credit report from the credit reporting agency that prepared it for the landlord. This allows an applicant to review the report and spot any incorrect information.

California Civil Code Section § 1786.24 allows a consumer to dispute any incorrect information listed on a credit report. Going forward, an applicant will know exactly what is listed on the credit report. This will allow the applicant to have a better chance of explaining certain negative information to a landlord.

It is important for both landlords and tenants to retain experienced and professional attorneys if they feel the use of a credit report has been improper in the rental application process. Please call Aziz Legal by phone (408) 203-4627 or email us at

This article is merely informational and is not intended to be used as legal advice. Use of any information from this article is for general information only and does not represent personal legal or tax advice, either express or implied. Readers are encouraged to consult Aziz Legal, or another attorney, for any specific legal matters.

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