A Social Security number is the key to vast amounts of private information about any person.
In the past, landlords regularly asked for Social Security numbers on rental applications so they could conduct background checks, but that’s no longer necessary.
All three major credit bureaus offer landlords the ability to order credit reports on their own, without having to request a Social Security number. And if you use a screening tool like Cozy, you can receive screening reports from your applicants without having to ask for or collect their Social Security numbers.
We created our screening tools because we believe that renters shouldn’t have to put sensitive information—including their Social Security numbers and bank account info—on a piece of paper and give it to someone they just met.
Asking for a prospective tenant’s Social Security number is no longer worth the risk, especially in a world where identity theft is a common crime. Of course renters are hesitant to give out this information. They should be.
Collecting Social Security numbers makes a landlord responsible for protecting someone else’s sensitive information. It can cost extra time and money to safeguard the information, whether you’re using something like locked file cabinets, encrypted electronic records, and so on.
If you feel you must collect a Social Security number, do it on the lease, not the rental application. That way, you’ll just have the Social Security numbers of your tenants, and not rejected applicants.
Let’s examine the pros and cons of collecting Social Security numbers on a traditional paper application.
Benefits of collecting a Social Security number
Sense of security
You feel like you have an edge by having an applicant’s most sensitive and valuable identifying information. But is that really a good thing?
You can hire a third-party background screening company to screen tenants for you. They won’t need a Social Security number to run criminal background checks, but they will for credit reports. Or you could use Cozy.
Landlords have the lowest success rate of collecting a debt compared with every other industry. However, if you want to hire a third-party collections agency to attempt to collect on any unpaid rent, you’ll need the tenant’s Social Security number.
Drawbacks of collecting a Social Security number
Burden of secure record keeping
You have to safeguard the personal information, which costs time and money.
You must follow many state laws regarding the storage of personally identifiable information (PII), many of which are confusing and easily broken.
You could (and should) be held liable if their identity is stolen because you failed to protect it.
Immediately a suspect
If their identity is stolen, you could find yourself at the top of a police suspect list, which is just unnecessary drama.
It creates distrust between you and the applicant, as you are forcing them to either jeopardize their identity security or risk not getting your rental unit. You’ll want to reduce entry barriers, not increase them.
Your family can’t be trusted
Most identities are stolen by a family member or trusted friend. Don’t give Uncle Bob a chance to steal your tenant’s identity.
You have to collect, process, and document application fees to pay for the third-party screening. Why not just have the tenant run and pay for their credit reports, and skip the application fee completely?
Why you don’t need to collect Social Security numbers
I often hear other landlords say, “I need to be able to ruin a tenant’s credit if they don’t pay rent.”
The truth is that you can’t report a debt directly to the three big credit bureaus. If you win the judgment, most credit reporting companies will pick up on the judgment automatically. No action is needed on your part.
Further, should you really be retaliating? It is often illegal.
Experian, TransUnion, and Equifax offer tenant screening services for landlords without the need for the landlord to collect a Social Security number. In fact, all you really need is an email address and the tenant’s participation.
We’ve taken this a step further by partnering with Experian to let tenants run their own credit reports in Cozy then share them with landlords.
Years ago, civil courts started removing Social Security numbers from criminal reports and court records.
All you really need to run a background check is the applicant’s first and last name and date of birth. Having previous addresses or a photo is helpful as well.
Evictions and small claims
You don’t need a Social Security number to file an eviction or small claims court case. The process will vary from county to county, but typically the only information needed to open a case is a name and current address. Check with your local civil courthouse to learn about your local eviction process.
During your court hearing, you can also ask for the court to approve a wage garnishment. If approved, the judge will issue a court order with requires an employer to comply. An employer would probably prefer you to have a Social Security number to verify the identity, but they can’t require it since the court didn’t require it.
Even if the tenant doesn’t show up for court, you would still be able to garnish wages without having the tenant’s social security number.
If you win a judgment and want to involve creditors and collection agencies, then you will need your tenant’s Social Security number. However, when you win the case, you can request that the judge force disclosure of the Social Security number at that time.
The only time this wouldn’t be realistic is if the tenant doesn’t show up for court. You would be awarded the eviction and possible financial judgement but wouldn’t be able to hire a collections agency to report the debt on their credit report.