Equifax Survey Highlights Top Pain Points for Tenant Screenings

Verifying income and employment and approving tenants with thin credit history were ranked as top concerns for property managers.

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Finding the right resident for a vacant unit is important, and property managers need to properly vet potential tenants. But screening isn’t always quick and easy, and many property managers report inefficiencies or pain points with the processes they have in place today.

A recent survey of more than 200 landlords and property managers conducted by MMR Research Associates, Inc., on behalf of Equifax found that nearly 95% of landlords and property managers are experiencing pain points in their standard screening practices.

According to the results, most managers expressed issues with verifying income and employment, and approving tenants with thin or no credit history, ranking them as the top hurdles to the screening process.

Verification of income and employment are critical components for approving a tenant, as there is a high correlation between employment and eviction rates. But the process is often manual, a problem that many property managers cited as problematic. Landlords often have to call an employer and tenants have to submit pay stubs, all of which can take anywhere from 2-10 days and delay the approval process.

“In a world where people expect everything to be immediate, they also expect the process of getting a home to be frictionless, quick, and one where they are able to get answer as fast as possible,” says Tyler Sawyer, vice president of rental and real estate for Equifax. “Putting a roof over their head is one of the most important decisions a person will make, so nobody wants to slow down that process, and it’s important to us to make it as frictionless as possible.”

Sawyer says the company has been working on a product to speed up the verification process, and turn a 2-10 day process into one that takes under a minute.

“We have focused a lot of our attention on investing in a product called a work number that can rapidly determine if someone’s employer is who they say it is and what their income is,” he says. “It’s an automated verification of employment and income that will be able to give a property manger or landlord a quick data check so that they can take the next step immediately. It certainly moves some folks through the process faster and relieves some of the tension and inefficiency with the manual verification.”

Thin or no credit profiles were also cited as a common pain point among property managers. Younger tenants with not much financial experience, or those from an older generation that purchased things using only cash, for example, may not have an extensive credit history for a quick approval.

“Lack of credit history doesn’t provide an easy, reassuring feeling for property managers that the tenant will be able to pay rent, and so they often have to do further background checks which really lengthens the screening process,” says Sawyer. “As a result, it may take too long for them to get the unit they want if someone else can be instantly approved, they may have to pay higher deposits, or get a co-signer–all of which makes the whole process more challenging. In reality these prospective tenants may have no financial trouble and have always made payments on time, they just didn’t do it through transactions that get tracked on a credit report.”

Equifax is currently developing ways to help those with thin or no credit history gain faster approval.

“There are a lot of areas where people are making important payments daily, weekly, or monthly that don’t translate on to a credit report, like phone bills, utilities, or past rental payments,” says Sawyer. “It’s important to be able to get a view point into those payments because it helps shed light on their ability to pay bills, so we are working on creating alternate scores and insights into so those scenarios.”

About the Author

Lauren Shanesy

Lauren is a former senior associate editor for Hanley Wood's residential construction group.

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