Rental applicants’ credit risks continue to improve, which not only helps renters’ costs but property manager costs as well.
According to a new data from TransUnion, rental applicants, particularly those applying for less expensive units, saw an improvement in their credit risk level by 0.8% between second quarter 2013 and second quarter 2014.
“We continue to see improvement in the credit risk of renters, which gives them more opportunities to receive better rental terms,” said Michael Doherty, senior vice president of TransUnion’s rental screening solutions group.
“This is a continuation of a trend we have now observed for the last few years. With the advent of rental reporting to TransUnion, improvements in credit risk will also help renters build their credit by making on-time, monthly rental payments,” Doherty said.
While the data reported improvements in credit risk levels for applicants across all property types, Type C (older, less desirable area) and Type D (older, less desirable area, renovations/updating needed), Type C (+1.2%) and Type D (+1.4%) rental properties experienced the largest improvements.
Average rental prices have increased 3.1% from $984 in Q2 2013 to $1,015 in Q2 2014.
In addition, the national average eviction amount has dropped from $1,980 over the last three years to $1,917 in second quarter 2014.
“Property managers generally incur fewer costs when their portfolio of renters is of a better quality,” added Doherty. The average eviction amount includes costs incurred by the property manager such as lost rent, property repairs and both operational and court costs per unit.
“Many consumers are still recovering from the economic malaise brought on by the past recession, but those consumers who wish to rent can now see meaningful improvements in their credit score after making their first on-time payment,” said Doherty. “This can help renters who want to purchase homes or cars receive better loan terms, potentially saving them thousands of dollars.”