October 25, 2012

Tenants Should Remain Alert For Credit-Checking Scams

Anytime you rent a new apartment you’re likely to be subjected to a credit check by your prospective landlord.  That’s just a fact of life.  And to get the ball rolling, the landlord requires just two pieces of information: full name and social security number.  Your name is not exactly a big secret, but your social security number certainly is.  Using your social security number, a fraudster can apply for credit in your name and leave all the bills unpaid, rendering you the victim of an identity theft that can take years to fix.  So naturally you don’t go around divulging your social security number to anyone who asks.

Lately it’s become increasingly common for identity thieves to obtain social security numbers by posing as landlords on public bulletin boards (craigslist being the typical venue).  They tempt their prey through false advertisements for wondrous apartments with unrealistically low rents and then, communicating through throwaway e-mail addresses, they request that the tenant submit to a credit check by following a link to an ostensibly reputable, but utterly bogus, credit checking website.  The website requests the tenant’s full name and social security number and then, well, pity the poor fool that completes the online form.  It goes without saying that the tenant will never hear from the “landlord” again and will spend the next several months sweating out the nightmare possibility that someone will apply for credit using the same name and social security number.  (If this happens to you, notify the three major credit bureaus immediately so a red flag can be placed on your account.)
To protect themselves, tenants should refrain from supplying a social security number unless and until they have independently confirmed the identity of the landlord or management company.  Meeting someone in person at a physical office is the ideal route and, in those cases where landlords use credit-checking websites, verifying the legitimacy of the website is critical.  A simple Google search can often supply all the information you need, but there are other options, like running a “whois” search or ensuring that the lock icon on the browser bar confirms the authenticity of the website.  At all times, tenants should be aware that, every time a landlord makes a “hard” inquiry into their credit history, their credit score decreases by a fixed amount.  Seems odd, but it’s true.  The credit bureaus automatically assume that any credit application or inquiry signifies either an assumption of new risk or an attempt to obtain new sources of credit due to financial predicaments.  (Next time a retailer offers you the chance to save money on a purchase by enrolling for a credit card, be aware that the adverse impact to your credit score may in all likelihood outweigh the financial benefit of the promotional discount.)
As an alternative to supplying a landlord with a social security number and leaving the credit checking to someone else, tenants might request the opportunity to obtain a copy of their own credit report from one of the three national consumer credit bureaus and deliver it to the landlord within 48 hours.  Under federal law, everyone is entitled to one free credit report every twelve months (annualcreditreport.com is the only authorized source, according to the Federal Trade Commission).  These types of inquiries are known as “soft pulls” because self-inquiries do not affect credit scores.  Provided the landlord is amenable to this approach, the tenant can avoid both the disclosure of his social security number and the adverse impact of a “hard pull.”
Truly diligent and protective tenants might also ask landlords about the types of safeguards they employ in the event that the landlord handles the credit checking himself.  For example, does the landlord retain the social security number after the credit check is completed and, if so, where is it stored and who has access to the information?  Finally, tenants who are rejected based on a credit inquiry are entitled by federal law to know the exact basis for the rejection and the name of the credit reporting agency upon whose information the landlord relied.
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