As landlords in the U.S. almost always engage in some form of automated screening of rental applicants, a new report from the National Consumer Law Center (NCLC) explains that the screening process is riddled with errors and bias that disproportionately harms Black and Latino/Hispanic renters.
The report, “Digital Denials: How Abuse, Bias, and Lack of Transparency in Tenant Screening Harm Renters,” examines the significant and often insurmountable barriers to decent, affordable housing that tenant screening creates for millions of renters.
The report was authored by Chi Chi Wu, NCLC Senior Attorney; Ariel Nelson, NCLC Staff Attorney; April Kuehnhoff, NCLC Staff Attorney; Steve Sharpe, NCLC Senior Attorney; Nicole Cabañez, a Skadden Fellow at the National Consumer Law Center; and Caroline Cohn, an Equal Justice Works fellow at the National Consumer Law Center.
“Tenant screening scores and recommendations create a misleading veneer of objectivity while concealing underlying racial disparities,” said Nelson. “Landlords frequently make leasing decisions based solely on these tenant screening scores and recommendations, and our research reveals that they are unlikely to hear disputes or to consider mitigating factors.”
The report notes that tenant screening often involves reports or scores purchased from specialized tenant screening consumer reporting agencies (CRAs). CRAs typically rely on automated tools (which may use artificial intelligence) instead of human decision makers, and they claim that their tools help eliminate bias. However, research indicates that these tools instead worsen discrimination in housing, because errors and racial disparities exist in the eviction filings, criminal records, and credit history that are fed into the algorithms to generate the scores as well as to “train” the models.
“There’s absolutely no evidence that credit scores have value in predicting whether a renter will pay their rent. Credit scores are designed for one thing only—to predict whether a consumer will be late on a loan,” said Wu. “And there are huge racial disparities in credit scoring, which means their use makes it harder for Black and Latino/Hispanic renters to obtain rental housing.”
To obtain detailed information about the effects of tenant screening, NCLC conducted a survey of attorneys, advocates and counselors, developed in consultation with the National Housing Law Project.
Results of the report highlight some of the most significant problems with the use of credit reports and scores in tenant screening, including eviction records that are plagued with inaccuracies and racial disparities, a lack of transparency in screening criteria, and ineffective dispute resolution processes.
“The manner in which tenant screening CRAs combine criminal records with other components to generate scores or recommendations similarly perpetuates serious racial disparities,” said Cohn. “It also undermines state policies designed to remove barriers for people with criminal records and their families.”
When coupled with a nationwide affordable housing shortage, tenant screening can often force renters into substandard yet more expensive housing–or even render them homeless.
“Not only did a high percentage of survey respondents report errors, they reported that disputing the errors had no impact because the landlords ignored the disputes and rejected renters without further consideration,” Nelson added.
The report recommends actions the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), Congress, and states can take to rein in the tenant screening industry and secure renters’ access to decent and affordable housing.
Click here for more information on the NCLC report, "Digital Denials: How Abuse, Bias, and Lack of Transparency in Tenant Screening Harm Renters."