Getting your tenant's on-time, late or skipped payments reported to the credit bureaus can be one of the most profitable things you do as a landlord or property manager. The benefits go beyond collecting a delinquent tenant's past due rent. Should you report your tenants' rent payment to the credit bureaus? Here are the top 8 reasons why you should.
1. Increase your Chances of Getting Paid On Time and in Full
Rental credit reporting service provider Sperlonga reports that their rental clients could reduce delinquent accounts by 50%. Bills like credit card or auto-loan get prioritized because borrowers know how late or non-payment can negatively impact their credit score. On the other hand, those who want to have higher credit score (basically everyone), will be motivated to pay on time knowing that they are also improving their credit score in the process. They won't risk ruining their score over something as important as paying rent on time.
2. Collect Past-Due Rent
If a tenant is not paying on time or in full, it will reflect in their credit history, which can motivate them to pay or encourage another landlord or property manager to deny an application from your tenant. You can enjoy this benefit if your rent reporting service submits both negative and positive payment data to the bureaus.
3. Reduce Vacancy Rates
You could offer this as an additional amenity. In TransUnion Research, two-thirds would choose a property with rent reporting over one without. Also, more than half of respondents stated they would like to have their rent reported.
4. Attract Credit Conscious Tenants
When you add report rent payment as an amenity, you will attract a pool of quality potential tenants who are willing to pay on time and in full. On the other hand, you could deter those who are not consistent with payments.
5. Help Rental Industry Make Informed Decisions
When a tenant opts in to have their rent payments reported on one property, it allows future landlords to view their rental history. Make sure that you choose a credit reporting service like Sperlonga that reports both positive and negative payment data - most rent reporting services only submit positive payment data.
6. Earn Ancillary Revenue
There are a very few credit reporting service that offers a revenue share option to landlords and property managers. Sperlonga has flexible revenue share models so your property can see a boost in their cash flow while passing this incredible benefit to the residents.
7. Support Residents in Building Credit History
When you report rent payments, you are helping your tenant build credit by adding positive rental payment data to their credit history. Once this is done, your tenant's score will begin to improve so they can start doing other things that require good credit. For example, they could qualify for lower interest rates and better terms when they apply for a car loan or mortgage, among many other financial benefits.
8. Reduce Resident Turnover Rate
When tenants know their rental payments are going to be reported to a bureau, they know they're improving their credit score with each on-time payment they make. Incentivizing on-time paying tenants establishes mutual trust, thereby adding more reasons why they should stay in your property.
On the other hand, there will be a consequence for those who do not do their part. At the end of the day, a landlord or a property manager has a cash flow and property to maintain.
It goes without saying that one's credit score can greatly impact their future prospects, making it a very powerful tool to influence someone's credit and payment behavior. So if you are a landlord or a property manager, you should consider leveraging this for you and your tenants' benefits.
Let one of Sperlonga's rent reporting experts guide you on the process and answer questions you may still have. Ensure that you enjoy these benefits sooner than later. Get started!