New credit report changes by the three credit bureaus make it even more important to report rental payment history data.
Man enjoying the view from his new apartment.
This past July the credit bureaus decided to stop including a number of tax liens and civil judgements in consumer credit reports. The exclusion of these types of items may or may not reflect on consumer credit scores. This change highlights the importance of a comprehensive tenant screening process including rental payment history.
For landlords and property managers, being able to review rental payment data gives you a strong indication of how likely applicants are to pay rent fully, and on time. Rental payment history data can also reveal prospective tenants who are more likely to skip our on their lease.
Consider this research from Experian, (one of the three major credit bureaus) shows the following:
Lease default rate for prospects
| No skips/no unpaid balance | 6% |
| One unpaid balance | 23% |
Yikes, it’s basically 4 times more likely that a prospective tenant with a single unpaid balance will default on their lease.
How do you reduce your risk?
Simple, include rental payment history in your tenant screening process. That way the recent credit report changes won’t impact your ability to access the risk of an applicant. You’ll have all the information you need to make an informed leasing decision.
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