Rental applicants, especially those applying for less expensive units, are seeing improvements in their credit risk, according to TransUnion.
Improvements in credit risk levels for applicants were observed for all property types, including: Type A (newer, institutional properties), Type B (older, institutional), Type C (older, less desirable area) and Type D (older, less desirable area, renovations/updating needed). Type C (+1.2%) and Type D (+1.4%) rental properties experienced the largest improvements.
The average ResidentScore, a measure used to assess a rental applicants risk level, improved by 0.8% between Q2 2013 and Q2 2014, according to TransUnion's Rental Screening Solutions industry report.
"This is great news for both renters and property managers," said Michael Doherty, senior vice president of TransUnions rental screening solutions group. "We continue to see improvement in the credit risk of renters, which gives them more opportunities to receive better rental terms. This is a continuation of a trend we have now observed for the last few years. With the advent of rental reporting to TransUnion, improvements in credit risk will also help renters build their credit by making on-time, monthly rental payments."
A
"Many consumers are still recovering from the economic malaise brought on by the past recession, but those consumers who wish to rent can now see meaningful improvements in their credit score after making their first on-time payment, said Doherty. "This can help renters who want to purchase homes or cars receive better loan terms, potentially saving them thousands of dollars.
The combination of a healthy rental market and improved credit risk of renters should bode well for consumers whose credit suffered as a result of the economic downturn. Many consumers turned to the rental market once home ownership was no longer an option.