Landlords making yes-no decisions based on a small set of factors, like credit history or bankruptcy, may be missing out on high quality tenants. For property owners, greater insight and data allows landlords to make an informed decision about potential tenants.
Financial Obligations
We all watch the news. We know the number of houses in foreclosure nationwide. As more homeowners face foreclosure, opt for a short-sale or declare bankruptcy, many landlords are overlooking the positive impact these unfortunate situations have on renter credit quality.
For example, John Smith lost his job when the company he worked for suddenly closed. As a result of this unemployment, he was unable to make his mortgage payments—resulting in foreclosure and, ultimately, bankruptcy.
Under the old rule-of-thumb standards, John and his family could very well have been denied as renters based on a standard credit report. However, when multiple factors are taken into consideration:
- New employment has led to stable income
- No other financial obligations
- No previous rental evictions or collections
The picture has changed dramatically.
John and his family exceed the landlord’s requirements, while emerging as highly desirable long-term tenants.
Little or no Credit Report
Tenant scoring is beneficial for applicants with thin credit files as well. With little or no credit history, these applicants are often quickly denied under old rule-of-thumb standards. Now, they can be scored on a wide range of “life” factors that increase their desirability as tenants.
Tenant scoring takes the guess-work out of choosing which factors will impact an applicant’s ability to complete the lease terms. Tenant scores can be used, not only to screen out the least desirable candidates, but can actually help identify the “best of the best” candidates.
With an easy-to-read, three-digit tenant score, landlords can instantly identify how likely an applicant is to stay longer and pay more over time. Lower turnover rates help improve stability for the landlord.
Combining quality data with the analytics, not only takes the guesswork out of tenant screening, it also helps increase income stability. It’s time to move beyond traditional pass-fail rental criteria in favor of more sophisticated, analytical statistical screening models.
From: http://www.myrental.com/
