Are you considering offering rental payment reporting to your tenants? If so, make sure that you know what questions to ask of potential providers.
It helps to know your goals when you ask questions, in order to maximize the benefits you receive from your choice of provider. Rent reporting can accomplish multiple objectives, including:
- Offering renters a way to benefit from on-time rent payments. If on-time payments are reported to credit bureaus, it can raise the renter’s credit score (or establish a credit history if they don’t currently have one). Credit scores are a path to applying for car loans, mortgage loans and credit cards. Plus, the higher the score, the more advantageous terms are likely to be.
- Reducing rent delinquencies, as tenants are incentivized to pay on time when they realize the potential effects on their credit score.
- Reducing paperwork burdens on property managers and landlords.
Here are some useful questions to ask potential providers.
- Does the company offer full reporting?
Full reporting reports both on-time and late payments to credit bureaus. Positive reporting reports only payments made, with a neutral report issued if payments aren’t made.
Consider the benefits to renters and yourself when choosing between the two. Positive reporting can help renters build a credit history. But only full reporting will reliably help on-time payers raise their scores. Why? Because credit bureaus (who determine credit scores) generally use both positive and negative reports available to them from a range of data sources. Positive-only reports skew their data.
Positive-only reporting also may not have the teeth to reduce delinquencies, because tenants aren’t incentivized to pay on time.
- Does the company integrate with the property management system that you use?
If a rental payment credit reporting company fully integrates with the property management system, you will be able to automatically pull the resident payment data on a monthly basis without causing extra work for your property management team. Without a seamless integration, the process could require a lot of manual, time-consuming work. If you have to provide administrative rights to your system (as if the rental payment company is an employee of the property management company), it can also be less secure.
- Does the provider charge per unit or per resident?
It’s important to look at whether you’ll be charged per unit or per resident. If a company charges per resident, your costs will likely be higher, as rental units usually have roughly 1.6 residents per unit. A per unit cost will likely be lower.
- What will be needed from you and your team on a monthly basis when it comes time to report on-time and delinquent payments?
Unfortunately, some providers say they offer full reporting, but property managers realize only once they’ve signed and onboarded that reports on delinquencies in fact requires a lot of work from them! You may have to fill out paperwork for every renter who misses a payment, for every month they miss.
- How does the company handle renter issues/ complaints/ questions? Does the company offer a direct line so property managers don’t have to manage these calls?
It’s not uncommon for renters to have questions, about rent reporting, their specific payments or even the impact on their credit scores. These can be time-consuming if your solution provider doesn’t have a direct line to answer them.
- How has the company helped their property managers lower delinquencies – do they have data to show results?
Ask for data and compare it with competitors if they have it. By the way, don’t just ask about delinquencies for current clients – have any former residents contacted them to pay off delinquent/missed payments once they realize the effect on their credit score? How often does this happen and what is the process?
- What is the contract term and what’s the importance of the term?
Credit bureaus look for consistent, recurring on-time payments. A contract term of under 6 months has the potential to negatively impact a renter’s credit history even if they are paying on time, because the time span isn’t long enough to provide strongly recurring data.
What CredHub Offers
CredHub offers the most advantageous method of helping tenants and property managers achieve their goals. Specifically, we provide:
- Both complete (positive and negative) and positive-only rent reporting
- Smooth integration with existing property management systems
- Per-unit costs, for lower charges
- Volume unit discounts
- Easy-to-use portal to track all positive and negative payments for easy review and submission
- Direct renter help lines and customer support
- A 1-year contract commencing billing that starts on day 1 for all units or a 2-year contract where new renters are added to the service during move-ins or lease renewals.
Get in touch with our team online or by calling (833) 888-2733.