Should Landlords Offer Tenant Credit Reporting?

Tenant wants and needs often inspire new trends in real estate. Tenant credit reporting is one popular request across the industry.

As one of the most in-demand amenities in 2022, tenant credit reporting now offered by many landlords. Reliable tenants, especially those who anticipate renting for several years or more, want their histories of on-time rent payments to reflect on their credit scores.

By offering tenant credit reporting, you can play a role in helping your tenants build their credit. You’ll also benefit other landlords and property managers in the process.

But is tenant credit reporting also beneficial for landlords? Should you offer it regardless?

Here is everything you need to know about tenant credit reporting and why it benefits all parties.

What is Tenant Credit Reporting?

Tenant credit reporting (or alternatively, rent reporting) is a service that reports tenant rent payments (both the on-time and late ones) to a credit reporting agency.

The big three credit reporting bureaus are Experian, TransUnion, Equifax. You may report your tenants’ payments to any of these three agencies, depending on who provides the service.

What are the Benefits for Tenants?

Tenants who pay on-time have little to lose with this feature. Tenant credit reporting helps tenants:

Build Credit Scores for Free

Many tenants want to use their monthly rent payments to build credit. Younger tenants especially benefit from this feature—these renters might lack the long-term experience or card ownership requirements to achieve a high credit score. With car payments, mortgages, or student loans in their futures, they need to start building strong credit scores now.

Get Rewarded for On-Time Payments

Who doesn’t like to be rewarded for the things they do right? Tenant credit reporting rewards tenants who pay on-time, every time.

Stay Accountable with Incentivization

Because tenant credit reporting is optional, it serves as a great incentive to stay on-top of rent payments. This service enforces accountability with positive motivation (higher credit scores) rather than negative (late fees and eviction). A tenant who opts in to rent reporting is self-motivated to pay on-time. You don’t have to lift a finger to keep your tenants accountable.

Achieve Long-term Goals

High credit scores are required for car loans, mortgages, and low interest rates. Tenants who opt into tenant credit reporting make progress on their long-term goals.

What are the Benefits for Landlords?

Tenant credit reporting isn’t just for tenants. It also benefits landlords. Tenant credit reporting:

Attracts Tenants Who Pay On-Time

Tenants who consistently pay on-time will seek out landlords who offer this feature. This is great news for you—fewer risker tenants, stable income, and little chance of eviction due to unpaid rent.

Keeps Your Tenants Happy

Tenants who request tenant credit reporting will appreciate the opportunity you’re giving them to build their credit scores. Plus, not every landlord offers this feature. Tenants who use it will be less likely to move out.

Aids Your Tenant Screening

Credit reports are viewable by any landlord during tenant screening. By offering rent reporting, you’re helping the larger community of landlords gain more information during tenant screening. The same applies to you—you’ll be able to view new applicants’ rent payment histories if their previous landlord offered the feature.

Can Be Free

Tenant credit reporting is often a free feature on your property management software platform.

How to Report Rent Payments to Credit Bureaus

Here’s how to get started reporting your tenants’ rent payments to credit bureaus.

First, find out if the feature if offered by your property management software. If so, you can activate and advertise the feature to your tenants, who may enroll and unenroll at any time.

When the ‘build credit’ toggle is on, your tenants’ previous payments won’t be reported. Only the payments they make after activating the feature will be reported.

Security deposits and pet deposits are not reported. Offline payments (cash or checks) are also excluded. Because the service is integrated with your property management software, it only reports payments with invoices on the platform. However, you can retroactively mark any months of offline payments as paid, in which case the late payment disappears and won’t be reported to the credit bureaus.

Conclusion

Tenant credit reporting is a hugely desired amenity for renters in 2022. Help your tenants, yourself, and your fellow landlords by offering this feature if you aren’t already. The benefits for all parties involved are well worth your time.

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