Do housing agencies and subsidized landlords check credit reports?
Yes. Housing agencies and subsidized landlords often get credit reports to see if there is information in them about whether you will be able to pay the rent. Credit reports (sometimes called consumer credit reports) are records showing how you have borrowed money and repaid it and what money you currently owe (debts). Almost every adult has a credit report.
Before you start looking for housing, it is a good idea to get a copy of your credit report to make sure there are no mistakes or old information that will hurt your application.
What information is in my credit report?
Your credit file has basic information about you, such as your Social Security Number, birth date, current and former addresses, and employers. It also lists what debts you owe and any amount that is due. In addition, it will include a summary of the number of times that any account was delinquent by 30, 60, and 90 days, the dates of the most recent delinquencies, and the dates of the most severe delinquencies. It will also list any accounts that have been turned over to a collection agency or for which there are any court judgments against you. It could contain public information about criminal arrests, convictions, and bankruptcies.
What information is not included in a credit report
Your credit report generally does not contain information about your race, religious preference, medical history, personal lifestyle, personal background, or political preference. It could, however, contain information about a consumer’s “character” and “reputation.”60 Income and driving records are rarely included. The report does not include personal comments or opinions about you from creditors or debt collection agencies, such as notations that you are a "deadbeat" or a "lousy credit risk."
There are three major national credit reporting companies: Experian (formerly TRW), Equifax, and TransUnion. There is a way to obtain a free copy of your report from all of these companies simultaneously.
Massachusetts residents are entitled to one free credit report per year from each of these credit reporting agencies.61 You are also entitled to a free report if:
- You are receiving public welfare assistance;
- You have been denied credit or housing within the last 60 days;
- You are unemployed and will be applying for a job in the next 60 days; or
- You have reason to believe that your credit report contains inaccurate information due to fraud.62
If you are not entitled to a free copy, the reporting agencies cannot charge you more than $8 for a copy of your credit report.63
There is also a national consumer reporting company called First Advantage SafeRent that provides information to multifamily housing providers. Its consumer reports contain information from public record sources and creditors and may also contain information about whether a person has been sued, has filed for bankruptcy, or has a criminal or civil court record. You can order national reports by phone, by mail, or on-line. To obtain a free copy of your consumer report from First Advantage SafeRent, you must fill out a Consumer Disclosure Request Form. When making a request, you may be asked to provide your name, social security number, current and previous address, driver's license, and current employer.
For contact information for all of these reporting companies, see CORI Assistance.
Once you get a copy of your credit report, take a careful look at it. Check to see if there are any mistakes or old information. For example, there might be information from another person's account on your report. Or it may show that you still owe a debt that has been paid. Or there may be information about a debt that is more than 7 years old.
Information about your accounts can only be reported for 7 years from the date that you failed to pay a debt, except for information about bankruptcies, which can remain on your report for 10 years.64 Criminal convictions never become obsolete for credit report purposes.
If you believe that your credit report contains incorrect or old information, you have a right to challenge the accuracy of the report.65 To do this, write a letter to each reporting company that has reported incorrect information. Tell the credit reporting company what you believe is incomplete or inaccurate, why, and request that they correct the item. Include with the letter copies of any documents that show that the information is wrong or misleading.66 Keep a copy of your letter and the originals of any supporting documents.
By law, the credit reporting company must reinvestigate and correct erroneous information.67 In most circumstances, the agency is required to get back to you with the results of the investigation within 30 days.68 You should also contact the company that provided the inaccurate or incomplete information to the credit bureau and request a correction of its records. The creditor who supplied the information has a duty to correct and update the information.69
If the credit reporting company does not resolve the dispute to your satisfaction, you have a right to include a statement (in 100 words or less) explaining your side of the story.70 This statement must be attached to your credit report and provided to anyone who accesses your report in the future.71
If the credit reporting company modifies or removes bad information from your file, you have a right to request that they send the new credit report to any person who has received your report within the past six months.72 The agency must send a corrected report within 15 business days of your request. The agency cannot charge a fee for this service.73
If you have bad credit because someone has stolen your personal or financial information, you may be the victim of identity fraud. For more information see Identity Theft or the Federal Trade Commission website Fighting Back Against Identity Theft.
If I have bad credit but have always paid my rent on time, can I get public or subsidized housing?
Your rent payment history is what is most important to a landlord. For some programs, it is a rule that you should not be denied housing based on bad credit if you can show that you always pay your rent on time.74 In order to demonstrate your rental payment history, ask for a copy of your rent ledger or a letter from former landlords, transitional living programs, or shelters (where a program fee was charged), or gather cancelled checks or money order receipts which demonstrate on-time rent payments. If you have paid your rent, you should always appeal a denial of housing based on poor credit history.
If I have bad credit, can a credit repair agency help me?
No. No one can legally remove accurate and timely information from a credit report. If there is inaccurate information on your report, you can challenge the inaccurate information yourself. It is not worth paying someone to do it for you. For more information about the dangers of credit repair agencies, see the Consumer Protection section of the Federal Trade Commission website.
Credit repair agencies are not the same as credit counseling services. Credit counseling services, which are often nonprofit organizations, can help you get your debt under control.These services have trained counselors who arrange repayment plans that are acceptable to you and your creditors, and they may be able to persuade creditors to lower or eliminate interest and late payments. The counselors can also help you set up a realistic budget. These counseling services are offered at little or no cost to consumers. You can find the office nearest you by checking the white pages of your telephone directory under 'Consumer Credit Counseling Service.'
Make minimal payments
Offer to make minimal payments to previous landlords to whom you owe money and to creditors who have reported debts that you still owe. Paying even $5 per month on time shows that you are making an effort to repay the debt and can improve your credit, even if it does not significantly reduce the debt. Concentrate on previous landlords and those creditors who report to the credit bureaus.
Supply positive but unreported payment history
Gather documentation of accounts which are in good standing, like medical copays or premiums, car insurance bills, child support payments, phone bills, cell phone bills, rent, utilities, program fees at shelters, storage facilities, or furniture rentals. Credit reporting companies do not usually include this information in their reports. Many, however, will add these accounts at your request—for a fee. But instead of paying the fee, you can supply the information directly to the housing agency where you are applying.
Explain damaging information
When you are applying for housing and you know the landlord will do a credit check, include a letter and documentation explaining your negative credit history. For example, you can show that a period in which you fell behind on bills was due to illness, unemployment, interruption of public benefits, or divorce.
Demonstrate positive income changes
Point out any increases in income, stabilized income (for example, getting approved for SSI), or increased earning power due to education or job training. Point out why paying rent will not be a problem if the rent is subsidized. Or, if you had a disabling illness that resulted in falling behind on your bills, but you are no longer ill, this would be important to explain.
Seek a reasonable accommodation
If your poor credit is due to a disability, you should request that a housing authority or landlord make a reasonable accommodation of your disability. Accommodations can include requests to ignore credit history from a time when you were untreated, if you are currently receiving treatment, to approve your application on the condition that you get a representative payee who will pay your rent.
Offer to have someone else pay the rent
Consider offering to arrange for a representative payee (if you are on SSI) or protective payments (if you receive welfare benefits) or a co-signer on a lease. Be aware that, once you get a representative payee, the payee will have control over how all your money is spent.
Apply to different types of landlords
Landlords who have larger multifamily developments and larger, city landlords are most likely to check your credit records. If you apply to many different types of landlords and housing programs, you may find some landlords who will not look into your credit report. For example, multifamily owners often use credit reports to screen out applications because they cannot afford to hire sufficient staff to screen applicants, while larger housing authorities rely more on CORI reports and extensive review of prior housing history.
If I don't have any credit history, can I get housing?
If you have never borrowed money from any entity that reports to credit reporting agencies, you will have no credit history. No credit history is not the same as bad credit history.75 You should not be denied public or subsidized housing for lack of any credit history. But you may have to convince a housing authority or subsidized landlord that you can afford to pay the rent.
6015 U.S.C. § 1681a(d).
61 G.L. c. 93, § 59(d).
62 15 U.S.C. §§ 1681j(b) and (c G.L. c. 93, § 59(a) (denied credit within last 60 days).
63 G.L. c. 93, § 59(c).
64 15 U.S.C. § 1681c(a G.L. c. 93, § 56(b), ¶ 3.
65 15 U.S.C. § 1681e(b) and § 1681i(a G.L. c. 93, §§ 56(b) and 58.
66 G.L. c. 93, §§ 56(b) and 57(a) and (b).
67 15 U.S.C. § 1681i(a)(1 G.L. c. 93, § 58.
68 15 U.S.C. § 1681i(a)(1 G.L. c. 93, § 58. Within 5 days of completing the investigation, the agency must notify you that the investigation is complete and send you a copy of your credit report if it has been revised. G.L. c. 93, § 58(e).
69 15 U.S.C. § 1681s-2(b G.L. c. 93, § 54A.
70 15 U.S.C. § 1681i(b) and (c). See also G.L. c. 93, § 58(d). ("If the reinvestigation does not resolve the dispute, the consumer may file a statement setting forth the nature of the dispute.").
71 15 U.S.C. § 1681i(c G.L. c. 93, § 58(f), providing that whenever a statement of dispute is filed, the consumer reporting agency shall, in any subsequent consumer report containing the information in question, clearly note that it is disputed by the consumer and provide the consumer's statement as part of its report.
72 15 U.S.C. § 1681i(d).
73 G.L. c. 93, § 58(g).
74 MassHousing’s Model Tenant Selection Plan, Rev 9/09, pp. 10-11. In re Oksentowicz, 314 B.R. 638 (Bankr. E.D.Mich. 2004), which found that a privately owned apartment complex participating in a subsidized housing program regulated by the federal government was a 'governmental unit,' subject to the anti-discrimination provisions of the Bankruptcy Code which were violated when it rejected plaintiff-debtor's housing application because the debtor filed Chapter 7 bankruptcy.
75 MassHousing’s Model Tenant Selection Plan, Rev 9/09, page 11, makes this clear. In other programs, lack of credit history is simply not one of the reasons listed for disqualification. See also HUD Multifamily Occupancy Handbook 4350.3 REV-1, CHG-3 (June 2009), Chapter 4.