Why Some Are Experimenting With Credit Score For Renters
COSTA MESA, Calif.-In what may signal a trend toward elevating the importance of rental payments in credit scoring, Experian has acquired RentBureau, a credit bureau for the multifamily housing industry.
The Filene Research Institute is also developing a "responsible renters score"-similar to a credit score but reflects an individual's rental payment history (Credit Union Journal, Aug. 9).
With the economy creating a larger number of renters and financials needing to expand credit scoring to capture more accurate and complete financial pictures of consumers, Brannan Johnston, corporate VP for Experian and managing director for RentBureau, said there is a great deal of interest in a renter's score. "Financial services companies want to reduce the number of no hits, unscoreables, or people with thin files. There are millions of consumers who rent, but because we don't have adequate trade lines we can't calculate a score."
Johnston said a renter's score will also help people build and rebuild their credit.
RentBureau's database receives rental payment histories every 24 hours from its national network of apartment owners and managers, which currently includes more than seven million residents nationwide. Members of this network furnish their rental data to RentBureau directly and automatically from their property management software.
According to Johnston, credit bureaus have been challenged to obtain renters' payment histories because the property management industry is extremely diverse. "There are thousands of these companies, most of whom lack the IT infrastructure to manipulate and transform their data in a way necessary to contribute it to traditional credit bureaus. RentBureau technology extracts data directly from property management software, so property managers don't have to be involved in the process."
Johnston said it is possible the renter's scoring system Experian develops will remain separate from its traditional consumer credit score. "We are developing our plans now in terms of how we will integrate it. I imagine it could be an enhanced offering."
Cost for the renter's score has yet to be set, Johnston added.