New Changes to Credit Score Reporting for Multifamily Housing
Credit scores are an integral part of everyone’s financial life. A good credit score can unlock savings and other financial benefits, like low interest rates and more favorable terms. Because timely rent payments are not traditionally reported to credit agencies, oftentimes renters face challenges building their credit.
Reporting timely rent payments allows residents, who may not otherwise have the opportunity, to build credit and improve their credit score. Offering this service to residents is a unique amenity that has quickly gained popularity over the last few years with no sign of slowing down in the future.
California legislature recently passed a bill that will make it easier for renters to build their credit scores. Senate Bill 1157 requires multifamily affordable housing landlords to provide residents with the option to have their timely rent payments reported to credit agencies. Residents are not required to participate; however, landlords will be required to offer this service to residents starting July 1st, 2021.
So what does this mean for property owners in Washington? Similar mandates are likely to spread elsewhere. And because of the resident benefit, it will likely happen first in states known for their pro-resident legislation, like Washington.
Instead of waiting for legislation in your state to pass, now is the time to take action. By acting now, not only will you already be compliant should the time come, but you can be on the leading edge of one of the newest amenities offered to residents. Conservice and RentPlus have come together to offer multifamily communities a dynamic solution to resident credit reporting needs. RentPlus reports on-time rent and utility payments through a simple process, making it easy for site staff to be compliant with new state requirements.
RentPlus integrates seamlessly with Conservice’s suite of solutions, auto-enrolling residents into the program for a low monthly fee. When making monthly payments, residents will not experience any changes, aside from a new line item on their monthly Conservice statement. Residents will continue to make payments as normal, while rental and utility payments are automatically pulled by RentPlus, and timely payments are reported to TransUnion and Equifax. Together, Conservice and RentPlus will even assist with lease language to integrate into management’s current utility addendum, helping property owners navigate each step of this new legal requirement. This is all done at no cost to landlords, as the law in California allows up to a $10 fee to be passed through to the resident for this service.
A recent study showed that over 90% of residents auto-enrolled in credit reporting through RentPlus opted to retain services. Residents feel empowered by building their credit score, and 95% of customers say they would recommend RentPlus to a friend. “Residents really like being able to improve and grow their credit with rent payments. And utility payments, we report on both,” said Marc Treitler, Partner and General Counsel at Conservice. Not only are residents rewarded for financially responsible behavior through positive reporting, but they also have access to world-class budgeting, education resources, and fraud protection through RentPlus services.
Residents aren’t the only ones that benefit from credit reporting. Landlords that offer this service see an increase in timely rent payments across their communities where residents are incentivized to do so. Communities using RentPlus also see a longer tenure with residents that use the service. On average, residents that use RentPlus stay 28 weeks longer than non-subscribers.
Considering all the benefits to both residents and landlords, it comes as no surprise that lawmakers in multiple states are pushing to make resident credit reporting a mandate. While California t is currently the only state to mandate resident credit reporting, it’s likely that it will eventually cross over into other states.
“I think it will spread to other states and non-affordable properties,” according to Mr. Treitler. “It doesn't matter if they're low income; the same argument can be made for anyone who has been renting for years and paying on time. Just as someone who owns a home and pays on time benefits from that on-time payment, the renter should be able to benefit from that on-time payment.”
The partnership Conservice has with RentPlus makes it easy for clients to implement and manage this service. RentPlus successfully onboarded over 200,000 units in 2020. Mr. Treitler explains, “It’s really hands-off for clients. We just help them with some lease language and marketing materials, where the tenant opts in or opts out for the program, and then it’s run through all the existing interfaces that Conservice has with our clients today.” FPI Management recently rolled out RentPlus, and Regional Marketing Manager,Nathan Wright notes, “RentPlus has been the easiest rollout my team has tackled this year!”
Together with RentPlus, Conservice can help multifamily owners and managers expand their amenity offerings by adding credit reporting. Visit http://info.conservice.com/help-your-resident-build-their-credit today to schedule a demo and learn more about how resident credit reporting can help owners and residents alike.