By furnishing rental payment data to Experian RentBureau, Mid-America Apartment Communities, Inc. (MAA), a leading real-estate investment trust in the apartment real-estate industry, was able to play an initial and ongoing role in the creation of a national rental payment database, offer a renewal-driving amenity to residents seeking to establish or build their credit history, and enhance efforts to improve resident retention rates and collections while decreasing skips.
Like many property managers and owners in the multifamily industry, MAA faces a number of ongoing challenges. When residents fail to pay rent on time — or skip out on a lease owing rent — MAA is forced into a lengthy and costly collections process to alleviate the bad debt. Although MAA views some rental payment delinquencies as inevitable across its portfolio of 49,000 units and 156 apartment properties, the firm has sought to improve collections while reducing delinquencies and skips.
MAA also sought a service that would benefit its residents by helping them to establish or rebuild credit history through consistent on-time rental payments. "People who own a home can easily build credit by paying their mortgage on time, but for renters there had not been a similar way for them to be recognized for paying their rent, which is typically their largest monthly expense," says Michael Halbrook, AVP, Director of Business Development, MAA. "We wanted to help recognize and reward them for those payments."
As an early adopter of sharing rental payments data, MAA began furnishing its rental payment history data to RentBureau in 2006. After the intial setup, MAA's data began secure transmission directly from MAA's property management software to RentBureau without any modification to existing software or any impact on operations.
Since furnishing data to RentBureau, MAA has built brand loyalty and improved resident satisfaction and retention. Experian is the only major credit reporting agency to incorporate multifamily rental payment data into consumer credit reports. By furnishing its rental payment data to Experian, MAA has helped its residents to build their overall credit. Continued positive testimonials and reviews have been shared on the REIT’s reporting of rental payment data to Experian. According to Halbrook, "The feedback has been very positive. It’s a huge benefit to the in-unit resident and really helps with retention."
After a 31-day hospitalization and its associated bills, MAA resident Barbara Ann Scott at Sky View Ranch in Arizona pulled her credit reports to gauge the impact on her credit score. "In September 2011, I pulled my credit reports, and it was then I realized Experian’s credit score was 71 points higher than TransUnion and Equifax. The only difference is Experian includes my rental payment history," Scott says.
"Although Sky View didn’t offer this service when I moved in three years ago, it did play a key role in my final decision to stay at the time of my last lease renewal. I’d also be more hesitant to rent in a community that does not offer this rental payment reporting through Experian RentBureau."
In addition, MAA has seen positive results using rental payment history in its efforts to increase on-time resident rent payments and reduce skips. "Shifts in the economy are always influencing how much people can pay and whether or not they pay on time, but furnishing rental payment history data to Experian RentBureau helps our broader efforts to reduce our delinquencies, improve our collections and increase our on-time rent payments," Halbrook says.
MAA also is proud of playing a lead role in creating a rental payment history database that will ultimately benefit the industry and its customer base as a whole. "We saw the 2010 acquisition of RentBureau by Experian as a natural progression in the effort to build a national rental payment history data set and incorporate rent into consumer credit reports," Halbrook says. "It was an opportunity for MAA to contribute to and ultimately benefit from a repository of rental payment history data not only from our own portfolio, but from other rental communities as well. We encourage any apartment community to partner with Experian RentBureau and realize the benefits of rental payment history data."