Tenant Screening Rules for Property Managers in 2026: FCRA Guide

A property manager may pull a tenant screening report on someone who applies to rent or renew, and must send an adverse action notice whenever anything in that report contributes to a denial, a cosigner requirement, a bigger deposit or higher rent.¹² The Fair Credit Reporting Act and Regulation V did not change when the CFPB withdrew 67 guidance documents in May 2025.³ Most of the 2026 changes are state and local. Maryland's criminal history and voucher screening laws took effect October 1, 2026, joining limits already in force in New Jersey, the District of Columbia, Cook County and California.⁴⁵

Full state tables are at application fee limits by state and state fair housing protected classes. Other federal rules are at /federal.

Permissible purpose and the duties that come with a report

A consumer reporting agency may furnish a report only for purposes the FCRA lists. The one that fits rentals is a "legitimate business need" for the information "in connection with a business transaction that is initiated by the consumer."¹ The FTC's landlord guidance says landlords may get reports on applicants and tenants who apply to rent or renew a lease, and must certify to the screening company that they will use the report only for housing purposes.²

The definition of a consumer report is broad. The FTC includes credit reports, eviction and rental history reports, criminal background reports, a risk score or recommendation built on criteria you chose, and reports from a service that calls prior landlords and employers for you.² If a vendor sits between you and the information, assume the FCRA applies.

Holding a report also means disposing of it with reasonable measures, such as shredding paper and destroying electronic media so it cannot be read or reconstructed, under the FTC's Disposal Rule.⁶ Willful noncompliance with the FCRA exposes a user to actual damages or statutory damages of $100 to $1,000, plus punitive damages and attorney's fees. Negligent noncompliance carries actual damages and attorney's fees.⁷⁸ For the adverse action duties, a user that shows it maintained reasonable procedures to comply has a defense.⁹

The adverse action notice under 1681m(a)

"Adverse action" includes any action taken on a consumer's application that is adverse to the consumer's interests.¹⁰ The FTC's landlord examples are a denial, a cosigner requirement, a deposit another applicant would not pay, a larger deposit, and higher rent. The notice is required even when the report played only a small part, or only prompted the further checking that led to the decision.²

Here is what 15 U.S.C. 1681m(a) requires.⁹

The score items come from 15 U.S.C. 1681g(f)(1).¹¹ The other items may be given orally, but the FTC calls written notice the best practice because it proves compliance.² Some states require writing. Washington requires a written notice stating the reasons, in a format substantially similar to a statutory form with boxes for an increased deposit, a qualified guarantor, last month's rent or higher rent.¹²

The FTC's own example belongs at every leasing desk: an applicant with a bankruptcy on the credit report is approved with a doubled security deposit. That is adverse action, and the notice is required.²

The risk-based pricing notice and when it applies

Section 1681m(h) and Regulation V (12 CFR 1022.70 to 1022.75) require a risk-based pricing notice from a person who uses a consumer report in connection with consumer credit and, based on it, provides that credit on materially less favorable terms than the best terms available to a substantial proportion of its consumers.¹³⁹ The notice says the terms were set using a consumer report, names each agency, explains the right to a free report within 60 days, points to the CFPB website, and lists the score details if a score was used.¹³

Whether this reaches a rental decision turns on the word "credit." Regulation V borrows the Equal Credit Opportunity Act definition: "the right granted by a creditor to a debtor to defer payment of debt or to incur debts and defer its payment or to purchase property or services and defer payment therefor."¹³¹⁴ A lease with rent paid in advance each month does not fit that text neatly, and the rule's own examples are student loans, credit cards, auto loans and mortgages.¹³ The FTC's landlord guidance does not mention risk-based pricing. It treats higher rent or deposits as adverse action under 1681m(a).²

The statute settles the practical question: no risk-based pricing notice is required when the person has provided or will provide an adverse action notice for the same transaction.⁹ The analysis gets closer if a manager or affiliate actually finances move-in costs over time based on a credit report, which deserves its own review. Risk-based pricing duties are enforced only by the agencies, not through private lawsuits.⁹

What the CFPB withdrew in 2025, and what still binds

On May 12, 2025, the CFPB withdrew 67 guidance documents.³ The list includes the January 2024 advisory opinion on background screening (89 FR 4171), the November 2021 opinion on name-only matching (86 FR 62468), the July 2022 opinion on permissible purposes, Circular 2022-07 on investigating disputes, and Bulletin 2021-03 on reporting rental information. The bureau said the withdrawal "is not necessarily final" and that it would not prioritize enforcing the withdrawn guidance during its review.³

On October 28, 2025, the bureau issued an interpretive rule saying the FCRA "generally preempts State laws that touch on broad areas of credit reporting," and arguing that states cannot keep categories such as arrest records off consumer reports.¹⁵ It addresses what reporting agencies may report and does not mention landlord screening statutes.¹⁵

What still binds you: the statute, Regulation V and the FTC's Disposal Rule, none of which the withdrawal touched.⁹¹³⁶ The FTC enforces the FCRA, and its July 2023 landlord guidance remains posted.² Consumers can still sue under 1681n and 1681o.⁷⁸

HUD followed a similar path. It withdrew its April 4, 2016 criminal records guidance effective September 25, 2025, and its June 10, 2022 implementation memo on criminal records effective September 17, 2025.¹⁶¹⁷ HUD said conduct that violates the text of the Fair Housing Act remains subject to enforcement and that private plaintiffs may sue within two years.¹⁷ HUD proposed on January 14, 2026 to remove its disparate impact regulations, and reopened comments through October 9, 2026 in an August 10 supplement. No final rule had been published as of October 7, 2026.¹⁸¹⁹

Accuracy, disputes and enforcement against screening companies

Screening companies must follow "reasonable procedures to assure maximum possible accuracy."²⁰ Federal law bars reporting arrests, civil suits and judgments more than seven years old (longer if the statute of limitations runs longer) but sets no age limit on convictions. The exceptions to the seven-year rule cover credit or life insurance of $150,000 or more and jobs paying $75,000 or more, not ordinary rentals.²¹

On October 12, 2023, the FTC and CFPB announced a $15 million settlement with TransUnion Rental Screening Solutions and Trans Union LLC: $11 million in consumer redress and a $4 million civil penalty.²² The agencies alleged the company reported one eviction case as several, reported filings without later dismissals, labeled amounts a landlord claimed as a "Judgment Amount," included sealed records, and failed to name the vendors that supplied records. The stipulated order was filed October 20, 2023 in federal court in Colorado.²²²³ In December 2020, a California company selling tenant background reports to property managers paid $4.25 million to settle FTC allegations that it did not verify vendor criminal and eviction records, producing records for people with a different name or birthdate, and that it reported eviction and non-conviction records older than seven years.²⁴

When an applicant disputes a record, 15 U.S.C. 1681i puts the duty on the reporting agency. It must reinvestigate free within 30 days (up to 15 more if the consumer sends relevant information), notify the source within five business days, delete or fix items that are inaccurate, incomplete or unverifiable, and send results within five business days of finishing.²⁵ The FCRA does not make you hold the unit, but some local laws give applicants a hearing with the landlord. The District requires providers to tell applicants they may dispute misattributed information and get a response, and New Jersey and Maryland require landlords to consider evidence that a criminal record is wrong.²⁶²⁷⁴

State and local criminal history limits

Federal law sets no lookback for convictions. These jurisdictions limit them, and all but California also require written disclosures before you take an application fee.

In New Jersey, Maryland and the District, a landlord may withdraw a conditional offer only to serve a substantial, legitimate, nondiscriminatory interest, and each law lists factors to weigh, such as the offense's severity and how long ago it happened.²⁷⁴²⁸ New Jersey and Maryland require written reasons and give applicants 30 days to request the records relied on, which the landlord must produce within 10 days. New Jersey's penalties run up to $1,000, $5,000 and $10,000 for first, second and repeat violations, and the Act bars private lawsuits in court. Maryland's penalty is up to $500 per violation, and its law preempts comparable local laws.²⁷⁴ Cook County's amendment took effect January 1, 2020, and denial must be necessary to protect against a demonstrable risk to safety or property.²⁹ California's regulations took effect the same day, and its Civil Rights Department says a policy with an unjustified discriminatory effect violates state law without any intent.³⁰

Two details catch multistate operators. In Maryland, a landlord that runs criminal checks must run them on every prospective tenant.⁴ Maryland and New Jersey ban ads saying you will not consider anyone arrested or convicted, and Cook County lists "no felons" as a phrase landlords can no longer use.⁴²⁷²⁹

Application fee caps and refund rules

There is no federal cap. The FTC sought comment on March 13, 2026 on rental housing fees "from application to move out," and no proposed rule had appeared in the Federal Register as of October 7, 2026.³¹

Sources: California Civil Code 1950.6, amended effective January 1, 2026;³² New York Real Property Law 238-a;³³ Virginia Code 55.1-1203;³⁴ D.C. Code 42-3505.10;²⁶ and RCW 59.18.257.¹² The District also bars denying an applicant solely on a credit score, and bars considering eviction filings three or more years old or that did not end in a judgment for possession.²⁶

Source of income, vouchers and written criteria

The federal Fair Housing Act's list in 42 U.S.C. 3604(a) does not include source of income.³⁵ Many states and cities add it, and some now regulate how you screen voucher holders.

Maryland's Chapter 773, effective October 1, 2026, says a landlord that uses financial information may not refuse an applicant with an income-based housing subsidy because of income, a credit score or lack of one, or bad credit from a period without a subsidy. The landlord may test income against the tenant's share of rent using a ratio substantially equivalent to the one it uses for other applicants, and may still rely on landlord references or a history of lease violations, unpaid utilities, nuisance or damage.⁵ The District counts Section 8 assistance as source of income and bars considering a subsidized applicant's income level, credit score (unless federal law requires it) or credit problems from unsubsidized periods.³⁶

Written criteria hold this together. California requires criteria in writing with the application under its first-qualified method, Washington and the District require disclosure before you gather information, and New Jersey requires its standards to be applied "to each applicant in a nondiscriminatory manner."^32122627 A written policy applied in the same order to every file is also your record if a fair housing claim arrives within the two-year private lawsuit window.¹⁷ The tenant lead to lease playbook shows where each disclosure fits.

What to do now

• Confirm each vendor certification lists housing as your only purpose, and pull reports only after someone applies to rent or renew.
• Put every 1681m(a) element in your adverse action template, plus score details when a score is used, and send it in writing for denials, cosigners, extra deposits and higher rent.
• Add Maryland's two October 1, 2026 laws if you manage five or more units there.
• Move criminal history questions off the first application in New Jersey, Maryland, the District and Cook County.
• Delete "no felons" and similar language from ads and criteria.
• Write lookback periods by jurisdiction into your criteria and train staff on individualized assessments.
• Check fees against each state cap and calendar refund deadlines.
• For voucher holders in Maryland and the District, drop credit score cutoffs and full-rent income tests.
• Tell applicants how to dispute a record and what evidence you will consider.
• Replace citations to withdrawn CFPB and HUD guidance with the statutes and regulations.
• Shred or wipe reports under a written disposal policy, and keep application files for at least two years.