Finding a great tenant can feel like a daunting task - landlords often get more applications than they can deal with! E...
Finding a great tenant can feel like a daunting task - landlords often get more applications than they can deal with! Experienced landlords understand that a great tenant is not simply the sum of their credit score.
Credit scores are kind of one-dimensional data that can be also outdated.
A 2013 Federal Trade Commission study discovered that 5% of consumers have errors on their scores, which can negatively affect their access to financial services and housing. This is a significant blow to the efficacy of relying solely on those scores in your due diligence to screen a tenant and mitigate risk. Experts are saying that there has been little notable improvements since 2013 to give any indication that the statistic of 5% has improved at all.
People who don’t use or rely on personal credit cards in their day-to-day spend often have an unfairly weighted score because of this; which is not a true reflection of their ability to pay. In fact, people with far superior budgeting and cash flow management skills refuse to use credit cards - but their score often doesn’t reflect that at all. Their preference NOT to use credit can negatively impact their score!
Young people, students, green card holders, and immigrants often fall into this category as well, even if their employment and financial status is sound and reliable. Truly, they would make a great tenant, but this one-dimensional ‘score’ can negatively impact their access to housing.
At Naborly, we want to arm landlords with multi-dimensional data to screen your prospective tenants, while ensuring equitable access to housing. We do not simply rely on the credit score.
Our model takes into consideration a prospective tenant’s past rental payments, recent expense payment ability, and verified income and combines that with their credit score, which results in a much more accurate prediction of risk.
US studies on bias in banking outline how rent and utility payments should be data points in scoring models: how instead of using past behavior to predict future repayment - it’s much smarter to look at current cash flow and ability to presently pay. That’s our model - Naborly looks at current status instead of the past which gives the most accurate predictive model.
By using a Naborly Score instead of a simple background check or one-dimensional credit score, you get more peace of mind and also become a critical part of preventing unwitting housing discrimination. It’s truly a win-win.
Learn more about bias in current scoring models, and about Naborly’s mission to improve the industry.
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