One of the toughest parts of being a landlord is finding the perfect tenants. Most landlords run credit reports on prospective tenants, but there is a disconnect between a person's ability to pay rent and their credit report. Since credit reports are not connected to a tenant's rent payment history, there is no direct link between a credit report and a person's ability to pay rent. Approving a tenant based solely on a decent credit report score, is based on the large assumption that if a person pays their credit cards and utility bills, then they must pay their rent on time. Although this holds true more often than not, it is not an exact science.
This is all about to change as the gap between rent payment history and credit report narrows. Experian has recently announced that they will be adding rental data to credit reports.
"Almost 96 million individuals who rent are not getting the full points that they should based on their current credit reports because such on-time payments typically do nothing to boost scores, according to the National Multi-Housing Council. Additionally, only a subset of negative rental activity usually has an impact on a credit score. With Experian's new offering, a solid payment history will help many renters who need help rebuilding their credit scores due to financial hardships such as foreclosure and bankruptcy."
"Given that one-third of the U.S. population rents, we felt it was imperative to reflect the true creditworthiness of those individuals who responsibly pay their rent," said Brannan Johnston, vice president and managing director of Experian's RentBureau unit.
Read more about his new development here.
Rentmatic is already looking into ways to integrate with this new Experian service to provide both rent payment histories and reciprocally alert landlords when negative information is found.
Tuesday, January 25, 2011
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