Improving the Financial Well-Being of Your Residents

Rental housing owners can improve the financial well-being of residents by reporting residents' positive rental payments to credit bureaus

Rental housing owners can help improve the financial well-being of residents by reporting residents’ positive rental payments to the major credit bureaus which provides renters with a potent incentive to pay their rent on time and in full.

By Alpa Lally

There can be no downplaying the tremendous responsibility placed upon apartment operators.

In exchange for what is usually a renter’s largest monthly financial obligation, operators are charged with providing quality homes and outstanding customer service. The importance of these tasks is clear.

But today’s property managers have the opportunity to play an even more important role in their renters’ lives. They can be true partners in helping their residents improve their financial well-being. And as you will see, they can do this in multiple ways.

Reporting Positive Rent Payments

 A strong, positive credit history is essential to securing car loans, credit cards and mortgages – and to doing so at favorable interest rates.

For many households, rent is the single largest monthly expense. yet despite responsible money habits, apartment residents, unlike homeowners, traditionally have not gotten credit on their credit reports for making their housing payments on time and in full.

Every person deserves the opportunity to reach their full financial potential, and apartment operators can empower their residents to improve their financial wellbeing.

Take for consideration, emerging consumers. More than a third of renters (34 percent) are under the age of 35. This is a pivotal time to start building credit and establishing a strong financial future. But for too many consumers, simple access to fair and affordable credit has long been out of reach.

According to the Credit Builders Alliance (CBA), renters are seven times more likely to be “credit invisible” – meaning they lack enough credit history to generate a credit score – when compared to homeowners. The fact that rent payments typically don’t help build credit history also is particularly harmful to lower-income households and underserved communities.

Renters make up approximately 60 percent of the U.S. households that make less than $25,000 a year, while Black and Hispanic households are twice as likely as white households to rent, CBA says.

Apartment operators can help remedy this situation – and lend their residents a powerful helping hand – by reporting residents’ positive rental payments to the major credit bureaus. Doing this also provides renters with a potent incentive to pay their rent on time and in full. This step becomes a win for everyone.

In CBA’s Power of Rent Reporting pilot, 100 percent of renters who started off with no credit score became scorable at the near prime or prime level. In addition, residents with subprime scores saw their score increase by an average of 32 points.

Due to results like these, the effort to make sure renters’ credit histories benefit when they make their rent payments on time and in full continues to gather momentum. In California, lawmakers passed Senate Bill 1157, which became law on July 1, 2021, and requires affordable housing providers of a certain size to implement rent reporting for their residents. Last November, Freddie Mac announced an initiative to encourage multifamily operators to report on-time rental payments to the three major credit bureaus.

Experian is committed to working alongside consumers, partners and industry organizations including the Consumer Data Industry Association (CDIA) to drive financial inclusion through rent payments.

Flexible Payments

 Reporting positive rent payments to credit bureaus isn’t the only way rental-housing operators can help their residents financially.

Some forward-thinking apartment owners and managers also are offering flexible rent-payment schedules to their residents. Rather than requiring residents to make one large payment at the beginning of the month, they’re working with renters to set up payment schedules that are based on the residents’ pay cycles and that allow for multiple, smaller payments over the course of a month. Arrangements like these can help residents avoid expensive late fees and evictions.

Asia Capital Real Estate (ACRE) is an example of an operator that offers flexible rent payments. Last year, the company partnered with Till to offer flexible rent-payment options to residents in nearly 35 apartment communities in the Southeast and Midwest.

Looking ahead, as apartment owners and operators consider the ways they can better serve their residents, they should look for ways to help them improve their financial well-being. Reporting positive rental payment histories and offering other financial amenities can create a competitive advantage over other properties, drive better business results and is simply the right thing to do.

When operators extend a helping hand in this way, everybody wins.

About the Author

Alpa Lally is the vice president of data business for Experian’s core business in North America. She is responsible for product management related to Experian’s core and alternative data assets. Experian incorporates on-time rental payment data reported to Experian RentBureau into Experian credit reports.

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