Property Owners Look to Tech To Help Them Report Rents to Credit Agencies

Presented by Elevated Living

Propmodo Technology

By Franco Faraudo · September 18, 2024

Greetings,

This week, Propmodo Technology is diving into tenant engagement with the support of our friends at Elevated Living. Learn how to consolidate all of your multifamily technology & services into one white-labeled platform. Today’s newsletter explores how landlords are using software like Bilt Rewards and RealPage to simplify rent credit reporting.

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Property Owners Look to Tech To Help Them Report Rents to Credit Agencies

So much of our current economic system is based off of credit scores. These scores are given by rating agencies to reflect a person’s ability to pay off a debt. They affect everything from interest rates for credit cards to mortgage qualification. The inability of many lower-income people to establish credit is a major concern right now for many politicians as it is seen as exacerbating the wealth gap. They have identified rent payments, an expense that almost every low-income person pays regularly, as a possible way to help establish credit.

Some places are already starting to require certain landlords to report rental history to credit agencies. California has passed legislation requiring landlords of subsidized housing to offer tenants low-cost credit reporting for rent payments. There is also plans to make reporting a national requirement as well. A Senator from Georgia, Jon Ossof, has introduced the Access to Homeownership Act that would require any multifamily landlord that receives financing through Federal agencies like Fannie Mae or Freddie Mac to offer tenants the ability to have their on-time rental payments reported to credit bureaus.

Helping people build credit with their rental payments sounds like a no brainer, but a survey done by the Department of Housing and Urban Development shows that barriers still exist. They found that, even though this kind of reporting by the landlord would help improve credit scores, renters did not always trust the program. “One common refrain was how difficult it was to overcome residents’ distrust of the initiative and communicate the tangible benefits of rent reporting,” the researchers wrote in their findings.

Tenants' unwillingness to participate and a lack of guidance for landlords have pushed many to use software to implement rent reporting programs. “Although some landlords initially considered reporting directly to credit bureaus, each ultimately chose third-party software vendors to assist with implementation,” the HUD report explained. “The third-party vendors played a critical role in the early implementation stage by training staff members and offering modules that could integrate rent reporting into the landlords’ existing property management systems and automate some administrative duties.”

The rise of rent reporting laws and landlords’ desire to outsource this task has led to a proliferation of technology to meet the new requirement. Companies like Self Rent Reporting, Boom Pay, and Rental Kharma offer various services to help landlords and tenants report rent payments to credit agencies.

One company, Bilt Rewards, has taken the service even further. It allows tenants to earn rewards for on-time rent payments and pays landlords when residents spend their rewards at participating retailers and restaurants. Bilt Rewards has grown quickly, processing around $30 billion in payments annually. The company has raised over $500 million in funding and is now valued at $3.25 billion.

With only around 5 percent of landlords currently reporting to credit bureaus, more companies are likely to provide these types of solutions. Even large property management software companies like RealPage and Yardi are offering credit reporting options. However, with the proliferation of these services, those who find creative ways to deliver value and overcome obstacles like tenant pushback will be the ones to capture the market in this growing segment of the real estate industry.

Presented by Elevated Living

Too many portals? Consolidate all of your technology & services into one white-labeled platform

Elevated Living is a transformative 'All-in-One' platform for property management, integrating maintenance, amenities, rent payments, and concierge services into a single app. It uniquely combines software with hardware like smart locks and thermostats, enhancing resident convenience, security, and comfort while redefining modern living experiences.

Our average client saves money and reduces resident app fatigue & fragmented operations platforms by consolidating over 7+ different resident apps, vendors, and service providers.

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Propmodo Technology is edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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