What is the ICRAA and How Does it Affect Tenant Screening?

If you’re a rental housing professional who obtains background checks on applicants, it’s important to familiarize yourself with the California Investigative Consumer Reporting Agencies Act (ICRAA). Please note that the following is for informational purposes only and is not intended as legal advice.

What is the ICRAA?

You’re likely familiar with the federal Fair Credit Reporting Act (FCRA), which governs how credit bureaus can collect and share information about individuals, as well as consumers’ rights to have free access to their own credit reports. While housing-related and employment-related screening reports must still follow FCRA regulations, rental and employment decisions made in California (or for a rental property in the state) also need to abide by the ICRAA.

Similar to the federal Fair Credit Reporting Act (FCRA), the ICRAA regulates background reports used by employers and landlords for employment and rental decisions. It also governs consumer reporting agencies concerning any type of consumer report that gives information on an individual’s character, reputation, personal characteristics or mode of living. Under the ICRAA, applicants can request and receive a copy of the report that was requested by their employer or landlord.

Although the ICRAA was enacted in 1975, it wasn’t an issue for rental housing providers for decades because it was ruled unconstitutionally vague by the state appellate courts. Due to this, compliance wasn’t required. However, the decision was reversed in 2018 with the Supreme Court case Connor v. First Student Inc., which made compliance with the act mandatory.

How Does this Affect How I Screen Tenants?

Landlords and tenant screening companies are required to follow stricter requirements every time they use eviction and/or criminal background checks for rental housing decisions. Landlords are required to notify the applicant of their intention to run the report and get written permission from them to do so. You must also let the applicant know what type of information will be provided in the report; the information you receive can only be used for the purpose of a housing decision.

In addition, you’re also required to give the applicant the option of receiving a copy of the report free of charge. If the applicant would like a copy, you must provide it to them within three days of receiving your copy of the report.

While the IRCAA has been the standard in California since 2018, it’s recommended that all businesses and rental housing professionals in the U.S. adopt the policy to potentially alleviate any questions your applicants have about the reasons why they were denied.