There’s a lot of talk about big data. But what is big data — and what does it have to do with bad debt at rental properties? Simply put, big data is a conglomeration of information from various sources that can be analyzed to uncover behaviors and patterns for smart decision-making.
For example, an apartment property manager holding market data on pricing and amenities may end up with a set of numbers on a spreadsheet, hoping something meaningful will materialize. However, without special analytical tools, that information often offers little to no insights at all.
That’s what makes analytics a hot topic. Analyzing data patterns and trends is key to ensuring property managers reach the right customers in the right way.
So, what does this mean for property managers? Big data tools could help you find residents you previously may not have considered, but who on closer inspection, turn out to be sound possibilities. Or, big data can help you detect fraudulent IDs used in rental applications.
TransUnion provides the tools and data you need to find the best applicants and residents while lowering the chances of taking on bad debt. Let’s look at three different ways to approach the problem.
#1. Credit scores are all about loans, not renting
Many property managers use credit scores to gauge the reliability of a potential applicant. But credit scores rate how likely a person is to pay back a loan. Renting to someone isn't the same as loaning them money. So, if you're using a credit score to assess the worthiness of a potential resident, that criteria may not be relevant.
For instance, someone with a mediocre credit score could be an ideal resident. The point is the accuracy of your decisions requires a dataset that goes beyond credit scores to include specialized algorithms that lead to meaningful assessments.
#2. Not all evictions are equal
Some property managers treat a past eviction as a deterrent for potential renters. But dismissing every applicant who’s been evicted can make it more difficult to fill up units.
Fortunately, with the right data and the right tools, you can look past the obvious. Rather than a general "don't rent to anyone who's been evicted," analytical tools can assess an applicant's whole history to determine if they’re less risky today. You’ll lower the chance of needing to evict a renter and increase the number of applicants you accept.
#3. Applicants who don’t exist
There's one case where a good credit score isn’t a sign of a good applicant: When it's a score for someone who doesn't exist. Synthetic identity fraud is creating an entirely fictional identity by combining fabricated credentials not associated with a real person, then cashing in on its high credit score. If you rent to someone involved in this type of scam, you may incur serious debt that will never be paid back. With broad reach and data analytical ability, you can identify these fraudsters before damage is done.
TransUnion has the answers
TransUnion offers big data tools and services to help property management companies find the right residents and keep bad debt at bay. Check out these solutions for the challenges discussed above: