This is a guest blog from our partner, TransUnion.
Did you know 51% of surveyed renters would be more likely to choose a property that reports rent payments to the credit bureaus? This information is based on an October 2014 TransUnion survey which includes 1,001 responses from 18–64-year-old, U.S. consumers currently renting a home or apartment. Property management companies that offer rent payment reporting could gain a competitive advantage attracting more qualified, credit-conscious applicants.
Homeowners see mortgage payments on their credit report while renters paying similar amounts do not. Why not help renters establish their credit history? In turn, this could help your property convert more and better leads into actual residents by promoting that you report rental payments.
Reap the benefits of resident payment data
Resident payment data shows up as a line item tradeline on the credit report that provides a consumer’s rental payment history. Within 24–48 business hours of furnishing this data, payment behavior will be reflected in a consumer’s credit file. This helps you and other property managers identify potential risk and gives other types of credit issuers, like credit card companies and auto loan companies, important information they wouldn’t otherwise have. Access to resident credit data could help improve your decision-making process in the future, as well as lower bad debt and reduce delinquencies for your property management company overall.
Help residents build credit history
Not only does rental payment reporting help property managers make better business decisions, it encourages residents to pay on time. When they do, they’re rewarded by building their credit history and potentially improving their credit score. In fact, TransUnion analysis shows that 6 in 10 renters experienced positive or neutral changes in their VantageScore credit score after just one month. That immediate impact could enable them to gain access to lower interest rates on credit cards and auto loans, and may even save them money by reducing or eliminating utility and cell phone deposits.
Encourage on-time rent payments
Since both positive and negative payment information is reported on the credit report, late payers are more likely to pay on time if they know their payments are reflected in their credit history. The accurate reporting of a tenant’s payment behavior may enable you to better identify potential skips and chronically late payments.
As a property management company, there are many benefits in reporting rental payments. You may be able to help your residents build their credit histories and increase their purchasing power, while you attract better residents and reward those who pay on time. If you report your renter’s payments, both positive and negative data is accepted and disclosed, which encourages your residents to continue paying on time and allows you to see delinquencies in real time as you screen applicants – not just as collections or public records in arrears.
Contact your MRI Software representative to find out how rent payment reporting can benefit your organization.