New credit score regulations which will go into effect this month may have a significant impact on landlords' procedures regarding tenant credit screening.
According to the new rules, a lender or anyone else making a credit decision has to let borrowers know if their credit score disqualified them from the best deal. For example, the New York Times says if a landlord asks for several months rent in advance because a borrower has a low credit rating, they will need to show the applicant that negative report.
While the new rules will increase paperwork demands on landlords, they may also reduce conflicts with prospective tenants.
Because of the full disclosure, consumers will be able to see exactly what credit score they have, and where they need to be. The concrete numbers also eliminate any perception of discrimination an applicant may have had, and may even help consumers improve their credit profile if there was an error.
The new rules will go into effect on July 21, when the Consumer Financial Protection Bureau becomes operational. The new agency was created as part of the Dodd-Frank Act last year.