Working with a credit reporting service provider allows you to report your homeowners’ or tenants’ rent or assessment payments to the credit bureaus. This has given communities, landlords, and property or community association managers the leverage to ensure tenants and homeowners honor their rent or assessment obligations.
There are several credit reporting service providers. You have Sperlonga, Esusu, Rent Reporter among others.
But not all credit reporting service providers are created equal. Here are the top 6 things you should look for in a credit reporting service provider if you’re planning to report rent or assessment payments:
- Reports Both Positive and Negative Payment Data
- Can Provide a New Revenue Source
- Provides Resident Education Support
- Integrated with Major Management Systems or Provides Flexibility if You’re Not Using One
- Has Dedicated Consumer Relations Support
- Complete Credit Bureau Credential Support
- Reports Both Positive and Negative Payment Data
Neuroscience suggests that when it comes to motivating action (for example, getting people to work longer hours or producing better outputs), rewards may be more effective than punishments. And the inverse is true when trying to deter people from acting (for example, discouraging people from not paying or paying late) — in this case, punishments are more effective.
For your collections program to be effective in motivating on-time payments and in deterring the alternative, positive-only reporting won’t be as effective. There must be both a reward and a consequence. By reporting their positive payments to the credit bureaus, tenants or homeowners may get a boost to their credit scores by continuously paying on time. When tenants or homeowners know that their late and overdue payments can also be reported, this deters them from neglecting their rent or assessment obligations.
Before going with a credit reporting service provider, ask if they are reporting positive payment history only – go with a provider that could offer you both.
2. Can Provide a New Revenue Source
Reporting rent and assessment payments is a great program that not only influences your tenants or homeowners’ payment behaviors. It could also help increase your revenue by addressing vacancy rates and by bringing in new, additional revenue for your property or community management company.
The national vacancy rate has increased 3.45% over 12 months. 46.3% of vacant units have been empty for 2 months or less while 5.6% of vacant units have been empty for 2 years or more. If vacancy rate is an issue at your properties, credit reporting could be an amenity that you could offer. There is already high demand for this amenity and could even set your property apart from the competition. * According to TransUnion research, 2 of 3 tenants will choose a property that offers credit reporting vs one without. **
This could also be a revenue source for a property or a community management company, or a nonprofit, self-managed HOA. There are different ways how you want to offer this service to your residents. Choose a credit reporting service provider that has a revenue share option, so you have flexibility if you choose to pass along the charges to your residents while they enjoy a credit-building service.
3. Provides Resident Education Support
A tool is only as good as the skillfulness of the hand that wields it. Make sure that the company is offering support in educating your tenants or homeowners. This is best practice to ensure transparency and could even help you collect some of your delinquent accounts even before you start reporting.
4. Integrated with Major Management Systems or Provides Flexibility if You’re Not Using One
Choose a provider that can easily integrate with your property or community management software or offers flexibility in reporting so there is no major impact to your day-to-day operations.
5. Has dedicated consumer relations support
Reporting rent or assessment data is compliant with Fair Credit Reporting Act (FCRA) as long as consumer disputes are handled within the allowable time frame. Choose a credit reporting service provider that has a dedicated consumer dispute team that can take dispute management off your hands and are an expert on the FCRA requirements in managing consumer disputes.
6. Complete Credit Bureau Credential Support
Before you could report to the credit bureaus, a data furnisher needs to go through a credentialing process. It could be very complex to handle on your own so make sure that your provider offers a thorough onboarding process and support.
When done right and with the right credit reporting provider, Rent and Assessment Credit reporting could be a very powerful leverage to influence your tenants’ or homeowners’ payment habits. There are several providers out there but make sure to check the factors above to also protect your company or properties’ interests.
When rolled out properly with the right credit reporting solution, you could reduce your delinquencies by as much as 30% for HOAs and 50% for rental. Go with a provider that can show you real results.
“It really has streamlined our efforts and our attorneys’ efforts. After 3 years, delinquent accounts are down 68% and we have recovered $288,000 for the associations. I would highly recommend using Sperlonga’s credit reporting.” GNO Property’s President, Robert Philips.
*U.S. Census Bureau, 2022