06 Dec 2012
Contrary to what many may think, a credit bureau is not simply a negative database of “blacklisted” information.
Quite the opposite actually, says Michelle Dickens, managing director at Tenant Profile Network (TPN), a registered credit bureau specialising in tenant behaviour across both residential and commercial markets.
Dickens says 80 percent of the tenants on their database enjoy a positive profile.
Indeed, a tenant’s rating at a credit bureau can be useful when applying for a rental, a home loan or car finance.
As an example, think of a young tenant who has not yet built up a comprehensive credit history.
Their positive rental rating will help them to build this profile, making them a more attractive prospect when applying for future finance, she says.
Credit bureaus, work to the advantage of rental agents and landlords too.
Of course the obvious benefit is realised when it comes to placing a tenant in a property and a review of their rental credit rating will allow the agent to place tenants who are likely to be reliable with their payments, thereby avoiding the habitual defaulters, explains Dickens.
Credit bureaus have a responsibility to take reasonable steps to ensure the accuracy of consumer’s credit profiles, one TPN policy of sending SMSes to tenants on a monthly basis is beneficial on many levels.
It gives the tenant the opportunity to correct any inaccuracies that may have been recorded, such as a late payment when in fact the payment was actually on time.
“Moreover, this monthly reminder makes the tenant more aware that his payment behaviour is recorded and provides that extra push they may need to pay their rent on time.”
It also differentiates between those tenants who are having financial difficulties and those who are simply pushing the envelope, Dickens reports.
Perhaps the benefits of a tenant credit bureau’s services are best illustrated by way of an example.
We recently came across a tenant who had a poor traditional credit profile.
As a result, she was rejected as a potential tenant when she applied to lease a home.
The tenant, however, offered to pay nine months' rent upfront, and paid the remaining three months on time.
In this way, she was able to build a positive rental credit profile, which was reviewed when she next applied to rent a property.
Not surprisingly this application was successful, Dickens recalls.
“The benefit to the tenant is an obvious one – she was able to rectify a negative credit rating and successfully rent a property.”
It also shows that people show different payment behaviour when it comes to putting a roof over their heads.
Where they may be more casual about missing other payments, they are unlikely to default on their rent, she says.
Ultimately, in a depressed economic climate, tenant credit bureau networks provide a vital service to tenants and landlords alike, ensuring that negative credit ratings can indeed be rectified, but also securing trustworthy, responsible tenants, she adds.
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