Rental payment data helps improve efficiency and identify the best residents
Through the use of rental payment data in conjunction with credit scores in the
screening process, ALCO Management, Inc. was able to create a more efficient and consistent
screening process and improve the ability to identify the highest-quality residents.
ALCO was able to accept 12 percent more applicants based on their rental history data
instead of just their credit history alone.
Relying heavily on outside sources to provide information on an applicant’s
credit score, the ALCO Management team was concerned with the time needed for new
information to be reflected on a credit report and how the time-lapse negatively impacted
leasing practices and procedures. Further influencing the accuracy and timeliness
of a prospective resident’s rental application was the time-consuming and open-to-human-interpretation
practice of manual residency verification by the company’s on-site leasing staff.
In an effort to combat these concerns, ALCO took proactive measures and sought out
a solution that delivered real-time information that could be scored systematically
and reduce the time-consuming manual process of landlord reference checks.
“Our solution was to incorporate rental payment history data from Experian
RentBureau® with our credit screening criteria,” says Michael
Johnson, Executive Vice President and Chief Administrative Officer for ALCO, a Memphis,
Tenn.–based property management company of a conventional and government-assisted
apartment portfolio primarily in the southeastern United States. “In 2009 we
also started furnishing our properties’ rental payment information to Experian
RentBureau directly from our property management accounting system each night.”
In addition to receiving data on its own residents, ALCO gained access, through
its resident screening provider, to a database of rental payment history data updated
every 24 hours from more than 4,000 other communities, thus improving the ability
to identify high-quality residents, evaluate the risk associated with poor rental
prospects and increase the size of their applicant pool.
The results ALCO has realized impact every aspect of its operations, from reducing
the administrative burden of conducting manual verification calls to improving capabilities
to evaluate “healthy risk” for each individual applicant. One of the biggest
impacts has been the ability for ALCO to establish greater consistency over leasing
procedures and still retain customizable practices.
“We have the ability to individualize the screening criteria for each property
by assigning a weight to the rental history information,” says Johnson. “For
example, we may set the criteria to accept an applicant who has no credit or limited
credit if they have a positive rental history. Depending on the market, we may take
applicants who have a history of paying their rent even if they have a history of
not paying some other bill. The rental payment data is integrated in the screening
process and a recommendation to accept or reject the applicant is delivered without
my staff trying to interpret the data themselves. This gives me consistency
in reviewing applications.”
ALCO has seen the same benefits across its entire portfolio regardless of conventional
or affordable status. The data has enabled the company to structure its screening
and leasing criteria not just on property type, but by local market conditions. “In
a strong market, I want the best applicants available based on credit and rental history
payments. In a weaker market, I may give more reliance to the rental history than
the overall credit. We know that we are accepting 12 percent more applicants based
on their rental history data than just on credit history alone.”