A year ago, I guest lectured at two prominent universities. I polled the students about credit. Few understood the profound and pervasive impact credit has in their lives. How many understood their rent payments are not reported to the bureaus?
None. They are not alone.
What Does It Mean to Report Rent Payments to Bureaus?
Auto insurers, cell phone providers, utility companies, credit card companies and even potential employers pull credit on you for a number of reasons.
Few renters know that while mortgage payers reap a significant boost in their credit profile with each mortgage payment, no such benefit exists for renters — likely the very group that needs it.
Rent is typically the largest expense a renter has, but is not overwhelmingly reported to the bureaus.
Why aren’t Rent Payments Reported to Bureaus like Mortgage Payments?
A number of legitimate reasons:
Concentration of Reporters
Mortgage payments are highly concentrated with the country’s largest banks, lenders, and servicers. These entities are already reporting a number of lending activities to the bureaus.
By contrast, the Top 50 largest apartment managers and owners combined historically housed only 15% of the nation’s renters. So renters are a very dispersed market and harder to report on.
Similarly, technology has not been as accessible to apartments and landlords – though this trend is now quickly changing. Tools, like Rent Marketplace and others, can now aggregate this data and report it more easily. And bureaus have better defined technology and data standards to receive and normalize it.
Compliance and Knowledge
More renters are now aware of their credit scores thanks to commercialization of credit, data breaches, and the consumer watchdog agency, the Consumer Financial Protection Board (CFPB). Parties are more interested in improving their credit and, property managers are more comfortable with the compliance and processes surrounding the reporting.
Credit Bureau Interest
Credit bureaus are more interested in this hard-to-reach segmentation of consumers. They are seeking more ways to gather data especially on no-file or thin-file consumers.
Four Benefits Result When You Report Rent Payments to Bureaus
However, the evolution is underway and the win-win for all parties now exists.
There are four major benefits to you, as a landlord, when you report rent payments to bureaus:
- Attract Better Renters
- Ensure Late-Payers / No-Payers Experience Ramifications
- Assist your Fellow Landlords
Attract Better Renters
When you inform applicants you report rent payments to bureaus, good payers will be thrilled. You’ll be providing a benefit they care about.
By contrast, the late payers will look elsewhere.
Let’s compare the credit impact to first-time homebuyers as their mortgage payments make it into credit reports:
% of SubPrime Consumers that Experienced an Increase in their Vantage Credit Score One Month into Lease
As a renter, imagine a 5% credit score increase just for having rent payments reported. Another study by the Credit Builders Alliance found that of the 55% sub-prime consumers in their test, 90% boosted their credit score an average of 32 points by including positive rent history.
You can make a real impact here!
Ensure Late-Payers / No-Payers Experience Ramifications
Universally, few landlords want to rent to individuals that did not pay their prior landlord. The hard part is to uncover the late/missed payments.
Until recently, the only tools for landlords to report missed payments was through an eviction filing, a collection, or a landlord verification. Due to the effort, frankly, many landlords don’t bother. It’s easier, now.
And, even if you think the applicant doesn’t ‘care’ about credit, he/she will know that finding future homes will be difficult. They will understand that future landlords will likely see late payment history.
If a renter is considering two properties, and you offer this benefit, it can be the differentiating factor to win over a good renter.
It shows the renter that you are professional, up to date, and willing to reward good behavior.
% of Renters More Likely to Choose a Property If Landlord Reports Rent Payments to Bureau
How You can Report Rent Payments to the Bureaus
Reporting rent payments to bureaus is easy and free. Rent Marketplace is now one of the few approved organizations that can collect and report rent payments on behalf of individual landlords.
Basically, we need a little bit of up-front information like the lease start and end date. We’ll establish this in our reporting system and contact you each month to determine how much the renter paid and when.
Contact us at [email protected] to learn more.
There are four major benefits you will reap as a landlord when you report rent payments to bureaus. And, reporting is easy. Consider the impact this can make to you and your renters for very little effort.