generic Gen Z Helps Drive Property Managers To Report Rent Payments to Credit Agencies
There has been a rise in tenants seeking and having their rent payments reported to credit agencies, and the trend will continue, with Gen Z Americans pushing for the practice, as it’s helping them gain more access to credit, according to a new research.
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New TransUnion research found that more than 27% of property managers who are aware of the practice now report rent payments to credit reporting agencies with nearly one-third doing so since January 2020. This represents a significant jump from 17% in 2019.
Maitri Johnson, vice president of tenant and employment screening at TransUnion, told GOBankingRates that as the conversation around financial inclusion has grown, the importance of alternative data has arisen in importance.
“Rent payments are a cornerstone of alternative data. These conversations have highlighted the importance and value of reporting rent payments which has brought much needed awareness since 2019 by shining this spotlight,” Johnson said, adding that the appeal to tenants is that reporting rent payments allows them to establish and or strengthen their consumer credit score leading to greater access to financial goods and services.
As for property managers, they benefit from rent payment reporting by attracting renters who are focused on improving their financial health through reporting and creates good fiscal payment behavior when rent is reported
When renters were asked how having their rent payments reported to credit reporting agencies would influence their behavior, 77% said they would be more likely to pay on time. In addition, more than half of the respondents in the survey of renters are aware that rent payments can be reported and are at least somewhat interested in having their rent payments reported.
Those sentiments are more pronounced among Gen Z as 60% are aware of and interested in having their rent payments reported. In addition, 27% of Gen Z renters say they have their rent payments reported, compared with 15% of all renters, the research notes.
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Johnson told GOBankingRates that “Gen Z is quickly becoming the largest renter population and paying some of the highest rents on record and they simply want to get credit for their largest payment. As such, Gen Z are specifically seeking out rental properties that give them tangible value for their payments and our survey data clearly shows this,” Johnson said.
The top three reasons for reporting are that it helps residents build credit, with 80%. It encourages residents to pay on time, with 71%. It attracts residents who are financially responsible, with 49%.
As for renters, rent reporting has a positive impact, as more than 70% of those who have their rent payments reported to credit reporting agencies are seeing improvements in their credit scores. As a result, they are planning to leverage their higher scores for material lifestyle improvements: 41% will apply for a personal loan; 38% will apply for a mortgage, and 28% will apply for an auto loan.
“First, let’s start by acknowledging half of Americans are renters, with rent being their largest monthly financial responsibility,” Johnson said. ” Rent payment reporting is a type of alternative data that credit reporting agencies are increasingly willing to include in consumer credit reports. When consumers receive credit for on-time rent payments, they are able to then leverage their improved credit score for financial services–like a mortgage for a home purchase–that can significantly improve their quality of life and long-term financial health.”
Johnson added that many renters have “thin credit files,” which keeps them from getting a mortgage or other financial goods and services that can significantly improve their quality of life.
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“Making that possible for 70% of half our country’s adult population would be a monumental step toward financial inclusion,” Johnson added.
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This article originally appeared on GOBankingRates.com: Gen Z Helps Drive Property Managers To Report Rent Payments to Credit Agencies
