To build a credit history, landlords, property managers, and tenants should understand the importance of rent payments. As financial institutions seek to promote financial inclusion, a recent study found that rental tradelines can significantly improve the ability to predict credit delinquencies. When included in credit files, there was a 10+% improvement in the model’s ability to predict delinquencies compared to when rental payments were not included.
Those tenants who opt in for rent reporting are more likely to build their credit history faster, especially as rent payments possess strong predictive power into a consumer's likelihood of making payments on other credit obligations. TenantCloud offers users the added benefit of building their credit history through rent reporting, which can strengthen their credit scores.
What Is Rent Reporting?
Rent reporting is the process of reporting a tenant's rental payment history to credit bureaus, with the goal of building or improving the tenant's credit history and credit score. Rent reporting services are often offered by property management companies, landlords, or property management software like TenantCloud.
Rent Reporting Benefits for Tenants
For tenants, rent reporting can help build their credit history and improve their credit scores. When rent payments are reported to credit bureaus, they become a part of the tenant's credit report, which can help establish a positive credit history. This can be particularly beneficial for tenants with little or no credit history, as it can help them establish credit and improve their credit score.
Additionally, rent reporting can benefit tenants by helping them qualify for loans, credit cards, and other financial products that require a credit check. With a positive credit history, tenants may be able to secure better terms and rates on these products, ultimately saving them money.
Incorporating rental payments into credit reports can result in a significant increase in a tenant's credit score. On average, renters share a credit score boost of nearly 60 points when rental payments are included in their credit history. One of the main benefits of rent reporting is that credit scores increase as early as the first month.
This is how to enable Rent Reporting on your TenantCloud account: https://support.tenantcloud.com/faq/question/902
Benefits of Rent Reporting for Landlords
By providing rent reporting opportunities for their tenants' landlords, they reduce the risk of rent defaults and delinquencies. Moreover, rent reporting can benefit landlords by attracting and retaining good tenants. By offering rent reporting options to their tenants, landlords can differentiate themselves from other landlords and provide a unique benefit to their tenants. Rent reporting is an additional benefit beyond standard rental services.
With TenantCloud, tenants can establish a positive credit history, which can help them qualify for loans, credit cards, and other financial products that require a credit check.
Three Reasons to Enroll in Rent Reporting
- Help tenants build credit.
By reporting rental payments to credit bureaus, tenants with little to no credit history can establish a positive credit history. As on-time rental payments are reported over time, it can increase a tenant's credit score and improve their chances of being approved for loans, credit cards, and other financial services.
- Encourage tenants to pay on time.
Knowing that rent payments will be reported to credit bureaus can incentivize tenants to pay on time every month. Combining rent reports and online rent collection can result in fewer late payments, which can help reduce tenant turnover and improve a landlord’s cash flow.
- Attract renters who are financially responsible.
Tenant screening is a crucial step in finding financially responsible and reliable tenants. Integrating all the tools (asking pre-screening questions, tenant screening, and rent reporting) will result in a more stable tenant base, as financially responsible tenants are more likely to pay their rent on time and take better care of the rental property.
Building A Better Future with Rent Reporting
Rent payments are an essential aspect of a tenant's financial responsibility, but paying rent on time alone may not be sufficient to establish a credit history. To ensure that future landlords perceive them as reliable renters, tenants need to consider the importance of including their rental payment information in credit reports. Fortunately, TenantCloud offers a hassle-free rent reporting feature that allows tenants to easily track and report their rental payments.
By taking advantage of this feature, tenants can demonstrate their financial responsibility to potential landlords and increase their chances of being accepted for future rental opportunities. In turn, landlords who use TenantCloud to manage their properties can attract tenants who prioritize timely rent payments and are financially responsible, ultimately building a stronger, more reliable rental community.