Let’s take a short quiz.
Who are the most likely people who want to purchase their first home? Current renters.
Who are the people who need their credit score to positively reflect years of on-time rental payments? Current renters.
Who are the people who shouldn’t have to change the way they pay their rent just to have their credit score improved by their on-time payments? Current renters.
The answers to those questions are obvious. So why is this even an issue? Because most rental payments are not reported to the Credit Bureaus, and therefore have no opportunity to positively influence credit scores.
Is this a big problem? Let’s look at the numbers. In 2014, there were 104 million renters in the US which counts for 33% of the population. Of those, Millennials make up a huge portion of the market. In a survey of our millennial employees, we found that 83% still view home ownership as a major life goal.
So, you have an audience of renters with a goal of home ownership, and a system that doesn’t allow them to benefit from their on-time rental payments to raise their credit score to be able to qualify for a mortgage. That sounds like the prime opportunity for innovation. This is a problem that needs fixing.
And while Millennials are a large, vocal and often-analyzed group, there are other constituents who desperately need this service as well. Our friends in low income housing who are living paycheck to paycheck may not have the dream of home ownership, but they certainly deserve to benefit from on-time rental payments. Having that positive rental history could be the difference between getting approved or not – and if approved, determining the interest rate. Its importance can’t be over-stated.
The third question above speaks to ease of use and seamless adoption. If you are already paying your rent online, wouldn’t it be great if that software offered the option to report your positive results to the credit bureaus? That way, the renter doesn’t have to change their payment method – they just enroll in the credit reporting program and it is all taken care of.
PayLease recently implemented a credit reporting service designed to solve all of these predicaments. By enrolling in this optional service, renters have the opportunity to potentially build their credit score with each on-time payment made online. The payment data not only helps build credit scores, but can also help property managers validate a potential resident’s positive rent payment history. And, credit reporting is free to both the renter and the property management company, truly making it a win-win for all parties.
So ask yourself – are we taking care of our renters? Don’t they deserve to benefit from their diligence of on-time rental payments? Our constituents need a break. After all, it’s their money and they are spending it wisely. Let’s make it count.