You Pulled the Applicant's Credit Report Yourself. Now What Are You Legally Required to Do?

Published July 25, 2026

If you deny a South Bay rental applicant partly because of their credit report, federal and California law require a specific written notice. Here is what it must say.

If you pull an applicant's credit report yourself and then deny them partly because of it, both federal and California law require you to send a written adverse action notice naming the credit reporting agency and spelling out the applicant's rights. Skipping it exposes you to real money damages, and it applies even if the credit report was only a small part of your decision.

I get asked about this a lot by owners who are weighing whether to self-manage. Running your own credit checks feels simple: pull the report, look at the score, decide. The part people miss is that the moment you pull that report yourself, instead of routing the decision through a property manager or a dedicated tenant screening company, you personally take on the legal obligations that come with using it. A property manager who runs screening as part of their business has that process built in. A self-managing owner often does not, until the first denied applicant asks why.

What "permissible purpose" means before you even pull the report

Under the federal Fair Credit Reporting Act (FCRA), you cannot pull a consumer report on anyone just because you are curious. You need a permissible purpose, which for a landlord means you are evaluating that person for a rental transaction, and you generally need the applicant's written authorization to do it. In practice this means your rental application should include a clear disclosure that you will pull a consumer report and a signature line where the applicant authorizes it. If you are using a tenant screening service to run the actual pull, that service will also require you to certify you have a permissible purpose and consent before it releases anything.

Keep the signed authorization on file. If a dispute ever comes up, that document is your proof you were entitled to pull the report in the first place.

What counts as "adverse action" (it is broader than a flat denial)

The FTC's guidance is direct on this: adverse action is not limited to rejecting the application outright. It also covers things like requiring a larger deposit, requiring a cosigner, or offering a lease on worse terms than you would have offered without the credit report. If the credit report played any part, even a small one, in a decision that is worse for the applicant than what they otherwise would have gotten, the adverse action notice requirement is triggered.

This trips up a lot of self-managing owners because they think of "adverse action" as only saying no. If your actual practice is "approve, but require first and last month plus an extra half month deposit because of the credit report," that is still an adverse action.

What the notice has to say

Under California Civil Code section 1785.20, part of the state's Consumer Credit Reporting Agencies Act, and mirrored under federal FCRA, your written adverse action notice needs to include:

• The fact that you are taking adverse action based in whole or in part on a consumer credit report
• The name, address, and phone number of the credit reporting agency that supplied the report (not the applicant, the agency)
• A statement that the reporting agency did not make the decision and cannot explain the specific reason for it
• The applicant's right to get a free copy of that report from the agency within 60 days
• The applicant's right to dispute the accuracy or completeness of anything in the report directly with the agency

If you used a credit score as part of the decision, both federal and California law add a further requirement: you also need to disclose the actual score, the range that score falls within, the key factors that affected it, and the date the score was generated. A denial letter that just says "your credit was not sufficient" does not meet the bar.

Why this is worth getting right before you skip it

The FCRA gives applicants a private right to sue over this. A willful violation, meaning you knew about the requirement and skipped it anyway, or were reckless about whether you had to comply, can carry statutory damages of $100 to $1,000 per violation, plus actual damages, plus attorney's fees, and courts have room to add punitive damages on top. That is real exposure from a single missed letter, and it is not tied to whether the applicant can prove they were actually harmed by the missing notice, the FCRA does not require that showing for statutory damages on a willful violation.

The practical fix is not complicated. Build the adverse action notice into your process before you pull the first report, not after your first denial. Most tenant screening services that run the actual credit pull for you will generate a compliant adverse action letter automatically, which is one real advantage of using one even if you are handling everything else about leasing the unit yourself. If you are pulling reports through a source that does not generate that letter for you, write a template once, get the required fields right, and send it every time a report factors into a decision that goes against the applicant.

Common questions

Do I still need to send the notice if I deny the applicant for a reason unrelated to credit, like they didn't meet the income requirement?

If the credit report played no role at all in the decision, the adverse action notice is not triggered by that report. But be honest with yourself about whether it actually played zero role. If you looked at the credit report and it factored in even slightly alongside the income issue, the notice requirement applies.

Can I send the adverse action notice by email or text instead of mail?

Yes, oral notice is technically allowed under FCRA and electronic notice is generally accepted, but a written notice you can point to later is the safer practice. It gives you proof you complied and gives the applicant a clear, usable copy of their rights.

Is a screening company's credit check the same thing as an "investigative consumer report"?

Not necessarily. A standard credit report pulled through a consumer reporting agency is different from an investigative consumer report, which typically involves interviews about a person's character or reputation. California has separate rules for investigative reports under the Investigative Consumer Reporting Agencies Act. If your screening includes that kind of interview-based information, confirm with the agency or a licensed professional which set of notice rules applies to your specific report.

Last verified: July 25, 2026. This is general information for property owners, not legal advice. Confirm your specific situation with a licensed attorney or tenant screening professional before acting.

Kellie

Schofield Properties

323 Richmond Street, El Segundo, CA 90245

Topics: self-management, screening, south-bay, landlord-guide

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Schofield Properties is a family run property management company at 323 Richmond St, El Segundo, CA 90245. We have managed the South Bay since 1972 and personally oversee about 186 doors today. Book a call to talk about your property.