Rent reporting to credit bureaus can more renters to make payments on time according to a survey by TransUnion.
The survey, which includes responses from 1,330 current renters in the U.S. found that 73% of renters would be more likely to make on-time payments if property managers reported rent payments to a credit bureau. When given a choice between two similar properties, the survey found that 67% of renters in the survey said they would choose the rental unit with reporting already in place.
Underlining the importance of on-time payments for both property owners and renters, the survey revealed that nearly 82% of management companies would report rent payment if that would incentivize consumers to pay timely.
"Property managers that offer rent payment reporting are incentivizing residents to pay on-time because there is a tangible benefit," said Maitri Johnson, VP 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."
In fact, the survey revealed that rent reporting could also benefit subprime consumers. It found that consumers falling in this category were likely to see their credit scores increasing by "as much as 26 basis points," following a year of rent payment reporting. Additionally, rent reporting helped 100% of consumers whose credit scores were unscorable at the time of application to "become scorable."
"We are bringing more awareness to the prospect of rent payment reporting because both renters and property managers can reap the benefits of this practice," Johnson said.
When asked if they would report rent to avoid evictions, 82% of the respondents said that they would report payments if it would lower the risk of evictions or renters who skip payments. Furthermore, over 84% of property owners said that they would report the resident's rent payments to the credit bureau if it attracted more renters who paid on time.