By Stephen L. Burger,
CPM, CRX, CRM
The apartment rental market is transforming, with a
technology-driven approach to transparency, one that I believe rivals that of
the commercial real estate market. Experian, Equifax and TransUnion, the main
players on the credit-reporting stage, have all unveiled programs tracking the
total payment history of renters and homeowner association members--positive
information as well as negative.
This is a huge development, and one that I believe elevates
the entire industry. Ten years ago, determining the creditworthiness of a
tenant was a process mired in mystery. A management company could access the eviction
records of potential tenants, but that by no means presented a complete or fair
picture. Today, thanks to such services as mentioned above, a more accurate
profile exists, one that clearly benefits not only building ownership and
management, but also the tenants themselves.
This is especially true for diligent residents, who clearly
gain most from a complete credit picture and can now get proper credit--literally
and figuratively--for that diligence. In fact, as the Washington Post reported,
“When their monthly payments were reported to the
bureau by landlords, nearly 20 percent of renters saw an increase in their
score of 10 points or more after just one month.”
to the Experian RentBureau (For more information, click http://www.ebmc.com/uploads/Experian%20RentBureau%20Brochure%202014.pdf), the largest and most widely used
database of rental payment information, which currently boasts data on more
than 12 million residents nationwide. There, we can access rental payment
histories going back as far as 25 months, including such key information as
date opened, monthly payment amounts and recent payments.
As explained on our RentBureau page, “The addition of
positive rental payment data in Experian credit reports can be a tremendous
benefit to anyone who rents, especially non-credit, cash-based consumers. We
recognize the value of having a positive rental payment history, and we want to
provide our residents with this unique opportunity to get credit for their
on-time rental payments.” Equally important, the information is timely, updated
every 24 hours.
As Mike Gardner,
senior vice president and sales leader at Equifax, said in a statement earlier this month, “Equifax is committed to
providing consumers with additional means for building their credit histories.
Introducing new sources of data beyond what has traditionally been found on
credit files can provide additional insight into a consumer’s financial
behavior and help deliver expanded credit access.”
But there is an
equal and positive reaction to this new trend, one that benefits the building
manager. As I stated in last week’s blog, http://www.ebmc.com/Management-Trends---The-Property-Management-Value-Proposition, property managers are the key
drivers of real estate value and a major contributor to the bottom line of the
owner/investor. A major part of this mission is the screening
and retaining creditworthy tenants, and this growing trend takes much of the
guesswork out of that critical piece of the financial puzzle.
With the growing
acceptance and the clear need for programs such as these, the apartment
industry continues to grow in its sophistication and transparency and therefore
in its professionalism.
Email me and let
me know what your experience with credit-reporting services has been. As
always, we look forward to hearing from you.
Steve Burger, President
As president and COO
of Eugene Burger Management Co., Steve
Burger is directly responsible for the overall quality, depth and
consistency of management services provided in all 15 regions in the EBMC