TransUnion research finds rent payment reporting can benefit both renters and property managers
Property managers have been slow to adopt the process of reporting rent payments to credit bureaus, but findings from a new survey may motivate some of them to move a bit faster. The survey, commissioned by TransUnion (NYSE: TRU), found that seven in 10 renters (73%) would be more likely to make on-time rent payments if property managers reported rent payments to a credit bureau. Furthermore, when given a choice between two similar properties, two-thirds of renters (67%) in the survey said they would choose the rental unit with reporting already in place.
The survey, which took place in May 2019, included responses from 1,330 current renters in the United States. Rent payment reporting has been offered to property managers by TransUnion since 2014 as a way to help more people receive credit for making on-time payments. Yet only 17% of multifamily rental property executives in a separate TransUnion survey last month said they report payments.
“We are bringing more awareness to the prospect of rent payment reporting because both renters and property managers can reap the benefits of this practice. Property managers that offer rent payment reporting are incentivizing residents to pay on-time because there is a tangible benefit. Consumers that pay their rent on time – especially those who are younger and new to credit – can see this alternative data source help them to build their credit history towards a more secure financial future,” said Maitri Johnson, Vice President of Multifamily at TransUnion.
The benefits of rent reporting to consumers were highlighted in a TransUnion study of rental applicants during 2017. The study found that 100% of residents who were considered unscorable at the time of application became scorable following a year of rent payment reporting. The analysis also found that subprime consumers who make timely rental payments may see their credit score increase by as much as 26 points over the same time period.
“Including this form of alternative data on a credit report not only has the potential to boost credit scores in the near-term for consumers who pay on time, it can also benefit consumers down the road as they look to obtain lower interest rates, qualify for more credit products or gain access to higher credit lines or personal loans,” added Johnson.
From a property manager perspective, TransUnion’s survey of multi-family rental executives found that more education about rent reporting is needed. One of the misconceptions surrounding the service is that it is difficult or time consuming to implement, when it is actually very easy to do. Though 83% of property managers said they do not report rental payments, 65% were aware of the benefits that can be derived by doing so.
Other potential benefits of rental reporting that interested multi-family executives, included:
- Incentivizing behavior of current renters. Nearly 82% of property managers were somewhat or very likely to report rental payments if they could help incent residents’ behavior to have them pay on a timely basis.
- Attracting more reliable renters. More than 84% of respondents said they would be somewhat or very likely to report resident’s rent payments to a credit bureau if it would attract more renters who pay on time.
- Lowering risk of evictions. Approximately 82% of respondents said they would be somewhat or very likely to report rent payments if it could lower the risk of evictions or renters who skip on payments.
“Our goal is to educate and motivate more property managers to begin the practice of rent reporting because it’s clear that the benefits will not only help them, but many renters as well,” concluded Johnson.
For more information on TransUnion’s rent payment reporting solution, please visit https://www.transunion.com/product/residentcredit.
About the Surveys
The online renter survey took place in May 2019 and included responses from 1,330 renters ages 18 and above who are who are renting the home or apartment in which they currently live. The property manager survey took place in late April and early May 2019 and included responses from 74 multifamily executives.
Source: TransUnion Press Release