Credit Data Access: Managing Expectations in a Changing Landscape

The credit data landscape has changed quite a bit over the years – most of it is positive change for both landlords and consumers.  Gaining access to credit data on someone is serious stuff.

Let’s go into the main ways you can access credit data and what drove those changes — that way you can best manage your candidates’ expectations through the process, demonstrate your commitment to their privacy,  and highlight your professionalism and detail to compliance.

What Happened to Change Access to Credit Data?

About ten years ago, a data company called ChoicePoint sold data on over 150,000 consumers to fraudsters.  Some of the data sold included credit data and other sensitive personally-identifying information (SPII).  ChoicePoint then suffered the largest fine in FTC history, and almost overnight, everything about credit access changed.

I led ChoicePoint’s tenant screening business at the time.  ChoicePoint deployed industry-standard controls at the time, but the fraudsters had obtained legitimate business licenses from government entities, and so it was clear overnight that current industry standards weren’t good enough.

For weeks we worked around the clock, with routine conference calls well into the morning and all-work weekends.  I remember it more as an invigorating time, we knew we had to restore trust urgently, and we had the opportunity to create the standard going forward that would propel the data information industry.

The impact was massive since ChoicePoint mostly collected public record data and aggregated data from other third parties, like bureaus.  So, the bureaus were in panic mode also.

In time, the new standards became much more restrictive to access credit and other data — and while sometimes painful, this is a sea change for the positive.  It took a few years for the data companies to work with the federal and state agencies, but the landscape eventually settled.

And so, there are essentially two main ways to access credit data on individuals now.

How To Access Credit Data Today

The two main ways to access credit data are:

1.  Through a consumer-initiated transaction, generally using patented technology from a bureau
2.  Through a company entity, that has passed the bureau’s “credentialing” standards

Consumer-Initiated Transactions

When you use Rent Marketplace, you are utilizing a consumer-initiated transaction through a bureau patented technology.  The consumer must take action — specifically the consumer completes an online authentication process to prove they are who they claim to be, and to provide consent for you to access their credit (and other background details), and to release that information directly to you.

When you think about it, this makes great sense and is a terrific leap forward from the old days.  Benefits include:

1. The consumer’s explicit knowledge that a background is being run and that the results are being sent to you
2. Privacy of the consumer’s sensitive personally-identifying information (SPII) such as social security number
3. Privacy of the consumer’s credit card number, if applicable
4. Convenience
5. Speed, once the consumer does their part, background results are instant

On the flip side, the downside is that a landlord can’t just get the applicant’s social security number, plug it into a background system, and get instant results on the spot.  The applicant has to take action, which again has protections for the real estate investor and candidate.  In this manner, you can talk your candidates through the process, why it is this way, and how it’s good for them.

Most candidates will appreciate your knowledge and care of their data.

Passing a Bureau’s Credentialing Standards

Alternatively, you can choose to pass a bureau’s credentialing standards.  Though many details are kept private to prevent fraudsters from circumventing this system, the process generally entails:

1. Completing an application
2. Passing a site visit review from a bureau-mandated contractor
3. Providing business credentials

Reviews are performed at each step to ensure the business is legitimate and adequate safeguards are in place.  While most who opt for this process are business entities (HOA organizations, real estate brokers etc), individuals at times can pass as well.

The application process involves:

• Completing a form with business details including credit and business references.  You can expect that your references will be contacted to verify business legitimacy
• Details on the application such as address and phone number will be verified through proprietary means

The Site Visit Process:

• The contractor performing the site visit is broadly looking to determine that you are a legitimate entity and that you have the proper protocols in place to keep data secure.
• Locked file cabinets, physical security, shredders, business signage matching your application, and password controls are generally some of the items the contractor is looking for.

Providing Business Credentials:

• Articles of incorporation, tax ID numbers, leases and/or certificates of occupancy will be reviewed and details confirmed.

In total, this process can take two weeks to two months depending on availability, backlogs, and questions.  Also the bureau will charge a site visit fee that typically ranges from $70 to $150.

Upon successful completion, you can then access a system, input applicant information — including your applicant’s Social Security numbers (SSN’s), and receive instant credit and background results.

You should also expect periodic audits and follow-ups to ensure your business remains in good standing and that adequate safeguards remain in place.  Recall that should the bureau data be misused, bureaus are typically named in the lawsuits, so these controls are in place for good reason — for your benefit and their’s.

Summary

Both processes provide solid controls to benefit landlords, real estate investors, consumers, and data providers.  There are trade-offs between immediate access and applicant-initiated transactions to consider when deciding which method is best for you and your candidates.  Relaying why your process is structured as it is will help manage your candidate’s expectations and give them confidence about their security and privacy.

Rent Marketplace helps independent landlords, realtors, and local property managers save time and money with our one-stop shop solution suite. With integrated online applications, tenant screening, state-specific leases and more, users can find and move in better residents faster, while going paperless.

For additional information on Rent Marketplace, please visit our site at www.RentMarketplace or call us at 866-973-0971.  You can also follow us on Facebook, Twitter, LinkedIn, and Google+.