MHCO Columns

Lesson #6: Seemingly Neutral Credit Score Requirements May Discriminate



While enforcing legitimate and nondiscriminatory rental and community policies is allowed, an Oregon case serves as a reminder how policies that look neutral on their face may still be illegal if they have the effect of excluding people the FHA protects.  

Situation: A landlord rejects a black prospect with a credit score of 680 because her husband’s credit score is below the community’s 600 minimum. After the prospect sends the landlord an eloquent letter complaining about the “inequitable” credit score policy and its impact on “marginalized communities,” the landlord reaches out and tries to negotiate an arrangement with her. But she never sees the email. Testers later gather evidence suggesting that the landlord applies the policy selectively to exclude minorities. And even though she never actually applies for a rental, the prospect sues for racial discrimination.

You Make the Call: Did the landlord’s credit score minimum policy discriminate?

Answer: Yes

Ruling: The Oregon federal court says the prospect can sue the landlord for “adopting a policy that disproportionately makes housing unavailable to African-Americans.” True, the prospect never actually applied, but based on the testers’ evidence, the court agreed that applying would have just been a “futile gesture” [Owens v. Latitude Props., 2021 U.S. Dist. LEXIS 61054].

Takeaway: Rental policies and practices that appear neutral on their face may be illegal if they have the effect of discriminating against a protected group. This is true even if there’s no intent to discriminate. For example, statistics show that African Americans and Hispanics are arrested, convicted, and incarcerated at disproportionately higher rates than whites with respect to their share of the general population. Thus, while categorically refusing to rent to any person with a criminal record may look like a legitimate safety policy, it has the effect of discriminating against African Americans and Hispanics.