Study finds a key motivator for renters to keep to payment schedules
Residential landlords would benefit if rent payments were reported to credit bureaus.
But despite this, property managers have been slow to adopt the reporting practice despite the keenness of renters, according to a new report from TransUnion.
It found that 73% of renters said they would be more likely to make rent payments on time if payments were reported to credit bureaus but in a separate survey last month just 17% of multi-family rental executives said they reported.
As well as cutting the chance of defaulted payments, there’s another compelling reason for reporting to credit bureaus; 63% of respondents said they were more likely to choose a property where rents are reported compared to a similar property where they were not.
“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,” said Maitri Johnson, vice president of multifamily at TransUnion. “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.”
Aware of the benefits
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.
Among other findings of the surveys:
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.
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.
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 aim 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.
