LEW SICHELMAN
THE MORTGAGE SCENE
Creating Better Renters ... And Buyers Reporting rent payments to credit agencies is a good way to build future mortgage borrowers. BY LEW SICHELMAN | CONTRIBUTING WRITER, NATIONAL MORTGAGE PROFESSIONAL
T
he vast majority of Mom and Pop landlords are the backbone of the rental market. Yet most don’t report their tenants’ on-time rents to one or more of the three major credit bureaus. Chances are they don’t even spill the beans on folks when they miss a month or two. Based on a quick canvas of Equifax, TransUnion and Experian, it’s safe to say most big-time apartment owners, property management companies and landlords don’t report the good or the bad about their occupants, either. But it says here that all of them should, for a couple or reasons. First, recall, if you will, the old computer science axiom, “garbage in, garbage out.” Or, in this case, the more rental information the business puts into the system, the better historic information everyone will have on which to base their rental decisions and, later perhaps,
a decision on whether a prospect is mortgage-worthy. And two, reporting on-time rent payments could be a good marketing slant because it could help occupants improve their credit scores. Imagine a tag line such as this: “Live here and we will help you better your financial life and eventually move out of here into a home of your own.” More on marketing in a moment. First, let’s discuss reporting in general.
WHICH LANDLORDS ARE IN? None of the three national credit repositories are willing to say how many owners and operators report on-time rental payments. They won’t even say who some of their clients might be. “We do not disclose information about our customers,” Maitri Johnson, vice president of multi-family at Trans Union, told me in an e-mail response to several questions But they all believe such reporting should be universal. “Ideally,” said Johnson, “all landlords should participate in a rent payment reporting program.” The reason is pretty straight forward. “More data leads to better credit decisions,” Chris Hobday, vice president of USIS programs at Equifax, said in response to the same questions. Johnson at TU put it like this: It “encourages residents to continue paying on time and allows property managers to see delinquencies in real time as they screen applicants ... The availability of data can
strengthen the industry overall; it’s good for the ecosystem.” Indeed, a 2019 survey by TransUnion found that seven out of 10 renters are more likely to make on-time payments if payments, ontime or otherwise, were reported. Moreover, when choosing between two identical apartments, twothirds said they’d pick the one that reports their payments. Unfortunately, according to Hobday, most property managers “choose not to report.” Perhaps it’s too costly, though the repositories are loathe to discuss pricing. Or perhaps, as Hobday said, “it’s just too hard.”
THERE’S AN APP … To make it easier, the three credit repositories all work with thirdparty processors – the likes of RentReporters, Rent Track, Rent Dynamics and Datalinx – to help facilitate rental payment reporting. Just recently, Equifax unveiled a new direct-to-consumer partnership with Esusu, Zingo and Mobility Capital Finance, or MoCaFi, that allow tenants to opt-in to include their payments as part of their respective credit reports. Esusu, for example, partners with public and private sector developers to help them reduce turnover and missed payments. In the process, it also helps tenants build their all-important credit scores, those snapshots in time which show how well a consumer uses credit. Landlords aren’t the only ones who hold credit reports dear, of course. So do lenders.
