According to Dede’s Rentals, when landlords handle credit reports, they are required to abide by the Fair and Accurate Credit Transaction Act of 2003, also known as the “Red Flag Rule.” This legislation was passed (and subsequently modified) in response to increasing concerns about identity theft. As landlords, we don’t want to be victimized by someone using a false ID; likewise, as someone pulling, using and storing private credit data, we are required to do our part to identify, track, and limit our reliance upon substantially inaccurate information.

If you obtain credit reports, you must consistently cross reference data provided by your prospective tenant against similar information found on the credit report. For instance, do the names match? Is the Social Security number valid? Are there recent addresses on the credit report that are NOT on the application itself? Any and all of these possible discrepancies are considered to be “red flags.” You cannot legally proceed with the application until you resolve these mismatches. Furthermore, you are obligated to have in place some type of ledger or tracking system, wherein you log each and every instance when a red flag occurred, and what action you took to account for the discrepancy. Since this is a federal law, there are also penalties for non-compliance.

NOTE: We submit, for your consideration, the following recommendation. FACTA, the law which defined the scope of the Red Flag Rule, did not actually set specific guidelines for EXACTLY what type of system you must have in place to track discrepancies. There are different levels of obligation – the system that Wells Fargo has implemented is much more detailed than what you need, for example. For a solid package that would provide you, an independent landlord, with suitable policies and protection, I strongly recommend that you visit They have a very useful, inexpensive software program designed for just this purpose.

 If you have any questions please feel free to contact us at DeDe’s Rentals. We will be happy to help you.