Nationwide Housing Crisis Drives Controversy Over Tenant Screening

Many social systems are still struggling to recover and stabilize due to the economic measures intended to mitigate the impact of the 2020 pandemic. The housing rental sector has been particularly hard hit by these after-effects.

The need for landlords to protect their assets and existing tenants is evident. However, many cities in the country have a housing crisis. The debate over safeguarding property owners via tenant background checks or leniency toward those with low credit scores and prior criminal indiscretions continues.

Making housing a reality for more Americans is an obvious solution, yet regulations vary considerably across states. For example, unlike New Jersey, many states still wrangle with the concept, with a clear-cut ban on landlords doing background screening until after a conditional rental offer. Alameda County in California and Seattle, Washington, have also banned criminal record screening on potential tenants. However, tenant background screening limitations are not enforced everywhere.

Unlawful practices by landlords

Unscrupulous landlords are also problematic. Some have been known to demand an income at least three times greater than rent and receipts to prove past rental payments. Even stricter, a particular landlord set a credit score threshold of 750—an excellent score that only few can attain. Failing even one of these criteria was enough to send the landlord reaching for the next application in the pile.

FICO (a well-known credit score provider) states that only 24% of Americans have a score between 750 and 799.

Los Angeles landlords claim their hands are tied and that such criteria are their only protection against potential defaults. The city has various tenant protection laws, including rent control and security deposit rules. Still, there is no comprehensive ban on landlords conducting criminal background checks on applicants.

The push and pull between landlords needing to remain profitable and governments trying to address housing crises, shortages, and skyrocketing rents will unlikely be resolved soon. Many other locales have begun considering additional restrictions on how thoroughly landlords screen and consider tenants.

Sealed records

Arizona passed House Bill 2400 in 2023, enabling individuals to seal their criminal records within a shorter period. The law went into effect on January 1, 2023, allowing some individuals to petition for sealing their criminal records from public view.

It only applies to some individuals, such as those arrested but not charged, dismissed cases, not guilty findings or those convicted of less serious crimes who have completed their sentence.

Striking the right balance between supporting property owners and ensuring affordable access to housing remains a challenge. As an adversarial relationship develops in some locales between governments and landlords, what the future may hold for tenant screening is unclear.

As such, backgroundchecks.com will discontinue our tenant screening and related credit report services as we refocus on core markets, effective September 2024.