The Fair Credit Reporting Act (FCRA) places restrictions on how landlords can use consumer reports during resident screening, according to the Federal Trade Commission's Bureau of Consumer Protection.

Consumer reports collect not only credit information, but also data on an individual's lifestyle, character and reputation. This may include rental history and public records such as court or eviction files. The FCRA only restricts these reports when prepared by a credit bureau or other consumer reporting agency, so it does not apply in all cases.

One of the rules of FCRA is that a landlord must notify the tenant if he or she intends to decline the application, require a co-signer on the lease, require a larger deposit, an additional deposit or a higher rent based on information in the report.

The prospective renter, once informed of the situation, can dispute any consumer report if he or she believes the information on it to be incorrect. Landlords who take reasonable measures and make an effort to comply with FCRA are legally protected, but violators may be successfully sued for damages in federal court.