Can rent reporting be a game changer? It might be mandatory soon

From incentivizing renters to pay on-time to help them build credit, rent reporting has a variety of benefits.

Industry Insights

A new Harvard report reveals that 22.4 million of U.S. households spend more than 30% of their income on rent, with 12.1 million spending more than 50 percent. Moreover, nearly 45 million adults in the United States have a limited credit history, including 26 million credit-invisible adults.

In the ever-competitive world of rental housing, amenities have become a critical battleground for attracting and retaining renters. Gone are the days of simply marketing your available rentals and expecting renters to apply. Today’s rentals are getting bundled with an array of unique and innovative amenities designed to cater to the diverse needs and desires of modern renters.

Rent reporting needs to be your #1 amenity

It’s a massive opportunity to differentiate your rentals from the competition and do something that undoubtably helps more than 26 million renters to either build or improve their credit. If marketed properly, it will be the ultimate amenity. Renters will see an average boost of 40 points in the credit score within the first month of positive rent reporting, with credit-invisible renters seeing much higher increases.

Many landlords and property managers aren’t reporting rent to the credit bureaus, creating an opportunity for those savvy companies that want to leverage this amenity to differentiate their rentals.

But wait, there’s more…. benefits

We’ve interviewed several property managers that are using positive reporting early in the marketing efforts (think “on the listing” and “drip email campaigns”) and it’s definitely helping with leads and conversions. However, rent reporting can go both ways…if you have the right technology. Aptly recently partnered with CredHub to level up our accounts receivable workflow with the ability to report delinquent rent to the credit bureaus, incentivizing renters to pay their balances on-time.

We recently conducted a webinar on this topic and think it’s worth your time to check it out:

Pass GO & Collect Webinar by Aptly + CredHub Webinar on rent reporting and automating the collection process. www.loom.com/share/86a2790edc2442fe8cd968fa80626cf1?sid=0af09a2c-fc92-4c47-93de-39c565305e06

Will rent reporting be mandatory soon?

California’s Senate Bill 1157 went into effect July 1, 2021 requiring operators of subsidized multifamily units in the state of California to provide the option for tenants to have their rent payments reported to a major credit bureau. This bill intent is to help lower-income renters build credit history without having to open a new line of credit. This first of it’s kind Senate bill in California only applies to a certain asset type in just one state, but based on it’s success it could become more common nationwide in the future.

This bill does not apply to landlords or operators of assisted housing communities or those with 15 or fewer properties (unless the landlord owns more than one property and is an LLC / corporate structure)

California’s Senate Bill 1157

In a press release, the author of the bill, Senator Steven Bradford, said, “This bill, the first of its kind in the nation, starts to correct the longstanding inequity where those with the least resources have to fight the hardest to establish and improve their credit scores. Having a good credit score is the first step in helping renters achieve the American dream of homeownership. But, most renters today do not receive a benefit to their credit scores when they consistently pay their rent on time.”

If you read between the lines here, there’s a ton of incentive to make rent reporting part of your business operations beyond everything discussed above. Adopting rent reporting aligns your rentals and brand with state and nationwide initiatives to deal with the lingering economic hardships that stem from the COVID pandemic that have widened income inequalities.