One of the biggest problems owners and operators face each day and one that takes up a lot of time and mental energy of site staff is late or delinquent payments. However, when there’s an incentive for paying rent on time, like building credit, the likelihood of on time payments increases significantly and makes online, automated payments more attractive to residents. When staff don't have to chase down payments, they can focus on building a better resident experience, which in turn helps build better relationships between resident and the property because they aren’t constantly being hassled to pay rent.

Rent credit reporting is also a good way to build loyalty among residents while also helping you stand out from the competition and become the differentiating factor between choosing your property over another. Research has shown that 67% of renters said they would be more likely to rent from a property that offered rent credit reporting than a property that didn’t offer it. There’s still time for property owners to be early adopters of this service as less than 20% of properties currently report rent payments.

“Property managers that offer rent payment reporting are incentivizing residents to pay on time because there is a tangible benefit,” said Maitri Johnson, Vice President of Multifamily at TransUnion. At the end of the day, offering rent credit reporting is a win/win for both renters and properties because renters are building their credit more quickly and efficiently than they could have otherwise, and property owners have less bad debt on the books.

According to TransUnion, renters would be 73% more likely to make on time rent payments if that payment would be reported to a credit agency. This means improved cash flow for your business. Additionally, residents could view it as the property doing them a favor by helping them get credit for making on time rent payments.

Beyond that, it can help you attract the right type of resident. One who cares about their credit and is looking for ways to build and improve their credit rating and are willing to seek out properties that will help them do this. Research has also found that half of property owners say that rent reporting attracts higher quality, more financially responsible renters.

One other benefit for properties that are reporting on time rent payments is it reduces the risk for evictions, which can be costly and time consuming for the site teams and can leave a bad taste in the mouth of current residents who have to watch the eviction process up close. According to TransUnion, nearly three fourths of properties would consider reporting rent if it meant fewer late rent payments and less chance of evictions. On the resident side of things, 77% said they would be more likely to pay rent on time if they knew it would impact their credit score.

“Our goal is to educate and motivate more property managers to begin the practice of rent reporting because it’s clear that the benefits will not only help them, but many renters as well,” concluded Johnson.

Best practices for implementing rent credit reporting at your property

The key to having a successful rent credit reporting program is to have it be native to the renting process. It should be part of the application when the resident is signing up for insurance, agreeing to background check, etc. During that part of the process, they should have the opportunity to check a box that reports their payments to credit bureaus for a nominal fee.

When deciding what service to choose (if any at all), it’s important for you to weigh the benefits against any possible downside of implementing rent credit reporting because it isn’t free, however it is also a cost you can pass on to the resident because they're the ones that most directly benefit from reporting payments to credit bureaus.

As mentioned previously, regulations are moving in such a way that reporting rent is going to  be a requirement for properties if the resident opts in. This is already the case in California and soon to be in Colorado where a pilot program is running.

Some renters might be concerned about signing up for these types of programs in the event they might make a late payment that could have an adverse affect on their credit, but there’s no need to worry because only on time payments are reported.

When evaluating rent credit reporting solutions, your business should consider the cost, what credit bureaus they are able to report to, and how easy it is for residents to sign up for and for you to administer.

Rent credit reporting with Entrata

With its recent acquisition of Rent Dynamics, Entrata has positioned itself as the leader in rent credit reporting for the multifamily industry. Below are just a few of the benefits that can be achieved through RentPlus from Entrata.

What RentPlus does: RentPlus builds economic inclusion for residents through reporting of on time rent payments and providing a clearer path for renters to become homeowners. It allows renters to build and improve their credit by paying rent and utility bills on time. RentPlus also enables residents to backdate on time payments up to 24 months and have those payments reported to the top-three credit bureaus. Customer data shows that residents can improve their credit score by 48 points in the first twelve months just by paying rent on time, which is a significant increase.

In a TransUnion survey, 77% of respondents said they would be more likely to pay rent on time if they knew their rent payment history would be reported to credit reporting agencies.

RentPlus sees 2x more credit score points increased vs competitor properties and an 82% resident participation rate.

How RentPlus benefits PMCs: RentPlus promotes economic inclusion and value through rental reporting for credit building and financial tools., while driving ancillary revenue, resident retention, and ESG initiatives for socially conscious multifamily operators and managers.

What sets RentPlus apart from the competition: With RentPlus, it is also easy to enroll new participants and has a high enrollment rate among properties who have rolled it out and requires no additional fees to set up. Additionally, RentPlus is one of the only FCRA data furnishers that is SOC2 and PII compliant, meaning Entrata assumes full liability and manages residents data with the highest integrity. RentPlus also has flexible revenue sharing options down to the asset level, so PMCs can decide the enrollment model that works best for their portfolio down to a more granular level than other alternatives.

Learn more

Learn how RentPlus from Entrata can benefit both you and your residents and help you attract residents that meet your criteria, while also helping you drive ancillary revenue by downloading our latest ebook, The economics of rent credit reporting, today.