Renters & Credit Trends Part 2: Accessing and Reporting Gen Y Rental Payment History Data

Coming of age in a challenging economy is beginning to show an impact on the credit profiles of members of Gen Y.
christiansen in focus

There’s no doubt that Generation Y represents one of the biggest opportunities and most compelling customer demographics to the multifamily industry since baby boomers were the predominant renters decades ago. Coming of age in a challenging economy, however, is beginning to show an impact to the credit profiles of members of Gen Y.

Click on chart to enlarge.

Click on chart to enlarge.

Key findings from the most recent credit analysis by Experian (the parent company of Experian RentBureau and one of the three national credit reporting companies) released this July show that though Gen Y has been slower to use credit and has the lowest VantageScore® credit score average of all generations, its members nevertheless have significant opportunities to build credit history.

Click on chart to enlarge.

Click on chart to enlarge.

For apartment owners and managers looking to capture more of the Gen Y renter demographic, accessing and reporting rental payment history data is gaining traction quickly as a way to identify the best quality residents and establish a competitive advantage in the market by offering it as an amenity that can help to build credit history.

There are two distinct ways for apartment owners and operators to benefit from rental payment history data: accessing and reporting. Accessing involves including rental payment history data in the screening process through the apartment company’s screener. Reporting involves contributing rental payment history data to Experian RentBureau.

While Gen Y having the lowest average VantageScore credit score might seem to indicate a higher rental risk, accessing rental payment history data through screening companies allows property managers additional data-driven metrics for identifying the best renters.

In a recent Experian RentBureau study of 755,000 residents living in apartments around the country, prospects with positive rental payment history data had a lower-than-average default rate of almost 6 percent (5.96), while prospects with one prior rental debt had a default rate of 23.2 percent and prospects with two or more prior rental debts had a default rate of 35.2 percent. The analysis found that even when prospects have similar credit scores, rental payment history data can play a significant role in the ability of apartment companies to identify the highest-quality residents better, increase occupancy and realize more steady cash flow.

By reporting rental payment history data for their Gen Y residents, apartment owners and managers also can play a role in helping these all-important consumers build their credit history. This is a critical time for members of this generation to learn to use credit as a tool. Reporting rental payment data is one of the easiest ways for apartment owners and managers to help shape this generation’s financial future.

Editor’s Note: This is part two of a three-part Multi-Housing News series on renters, credit and rental payment history data. Read part 1 here.

Emily Christiansen is director at Costa Mesa, Calif.–based Experian RentBureau.