Background screening companies succeed when they help their customers succeed. And that’s especially true in the multifamily industry. So, how can you help your property management customers and prospects succeed?
One way is to advise them on ways to avoid the mistakes detailed in a new ebook from TransUnion — Five Pitfalls to Avoid Risk — and How to Overcome Them — which explains the flaws of using traditional credit models to find quality renters and offers valuable alternatives.
And your property management customers certainly need your help. Choosing the wrong residents can cost them much more than just lost revenue. The price they pay can skyrocket when you consider lengthy eviction processes, legal fees, increased vacancies and property damage, along with the damage to reputation and decreased renter satisfaction.
With that in mind, here are five pitfalls you can help property managers avoid — and their solutions.
#1 Insufficient data on each applicant’s unique profile
No two renters are exactly alike. Without enough data it can be nearly impossible to differentiate qualified renters from risky ones. Fortunately, giving property managers access to detailed personal and digital data can help them create a clear picture of each applicant’s financial profile and unique characteristics.
#2 Missing the factors currently impacting evictions
TransUnion data shows that there have been 1.4 million evictions in the US in 2019 . Without understanding the attributes that are currently impacting evictions, it’s challenging for property managers to effectively mitigate risk.
#3 Relying on generic credit scores
Traditional credit scores predict the likeliness of a consumer paying back a loan, but they don't account for the factors most relevant in multifamily. A scoring model built specifically for multifamily uses relevant renter details to address critical concerns like eviction risk and skips.
Learn more about the difference between a traditional score and an industry-specific score.
#4 Inability to score thin file applicants
Traditional scoring models are often unable to score thin file rental applicants who have a limited credit history, which means property managers may be overlooking good renters. Offering managers a credit model that can score thin files — like TransUnion ResidentScore® — can help broaden the pool of qualified applicants.
#5 Not having past performance history
Property managers may find it difficult to assess whether an applicant will prove to be a reliable renter without understanding that person’s history. For example, a standard credit model would likely score applicants Jake and Allison the same based on this identical criteria:
- Total loan debt: $12,000
- Monthly credit card balance: $2,400
- Number of delinquencies: 2
An in-depth multifamily scoring model, however, would identify key differentiating factors. For example, both applicants had two delinquencies in their histories. However, Jake’s occurred in the past two months, while Allison had two delinquencies more than 24 months ago. With this type of additional information, it becomes clear that Allison is more likely to be a reliable renter than Jake.
Help your customers — read the ebook
All in all, helping property managers take the right approach to vetting rental applicants is essential for them to evaluate risk — before an applicant moves in. Read our insight guide to learn more about how to help your customers avoid these roadblocks, resulting in less evictions and higher net operating income.