Rent Payment History Offers Greater Predictability into Consumer Credit Performance

Rhea-AI Summary

TransUnion analysis reveals that integrating rental tradeline data into credit reports enhances delinquency prediction accuracy by over 10%. The findings indicate that including rent payment history significantly improves the ability to forecast a consumer's likelihood of missing payments on various credit obligations within 12 months. This approach could aid in promoting financial inclusion by encouraging landlords to report rental data, thereby helping millions build their credit history.

Positive

• Rental tradeline data boosts delinquency prediction accuracy by over 10%.
• Improved predictive power could benefit financial institutions in credit evaluations.

Negative

• None.

TransUnion analysis shows rental tradeline data provides a 10+% lift in predicting delinquencies

CHICAGO, Dec. 07, 2021 (GLOBE NEWSWIRE) -- As financial institutions look for new ways to promote financial inclusion efforts in the new year, a new TransUnion (NYSE: TRU) analysis underscores the importance of rent payments as an alternative credit data asset and how this information can provide greater insight into future consumer credit performance.

The analysis looked at the ability to predict a 90+ days past due (DPD) delinquency over the course of 12 months on any type of credit obligation (i.e. auto loan, credit card, personal loan, etc.) and found that when rental tradelines were included in the credit file, there was a 10+% improvement in the model’s ability to predict delinquencies within a one year period, compared to when rental payments were not included.

“Rent payments can provide valuable insight into a consumer’s future credit behaviors. This alternative credit data, however, has traditionally not been leveraged by lenders despite the predictive power of such information,” said Maitri Johnson, vice president of tenant and employment screening at TransUnion. “Encouraging more landlords and property managers to conduct rent reporting is a key next step to making this data asset more accessible in the consumer credit market. It would also help millions of consumers build their credit history and bring them into the financial mainstream.”

Rent payments possess strong predictive power into a consumer’s likelihood of making payments on other credit obligations due to the prioritization of this expense. According to a recent survey commissioned by TransUnion, rent was cited as the most important bill to pay out of 15 different expenses by 59% of consumers. Reasons consumers perceived the importance of this expense included the severity of consequence of missing a payment, the value of the expense and the normalcy of having the expense.

“TransUnion’s findings support Fannie Mae’s belief that if someone is paying rent consistently it’s likely they could pay their mortgage consistently, too,” said Steve Holden, Vice President of Single-Family Analytics, Fannie Mae. “That’s why we recently updated our automated underwriting system to incorporate consumers’ rent payment history in the mortgage credit evaluation process, an important step forward in responsibly expanding mortgage credit access for thousands of renters. Wider consideration of rent payment history across the broader consumer reporting ecosystem could enable more financial institutions to similarly factor this type of credit data into their underwriting models. This is a win-win that demonstrates the potential of using technology and data to responsibly remove long-standing barriers to credit access, while helping to ensure consumers receive a more fair and inclusive credit eligibility assessment.”

For more information on ResidentCredit, TransUnion’s rent payment reporting solution, please visit https://www.transunion.com/product/residentcredit.

About TransUnion (NYSE: TRU)
TransUnion is a global information and insights company that makes trust possible in the modern economy. We do this by providing an actionable picture of each person so they can be reliably represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good®.

A leading presence in more than 30 countries across five continents, TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people.

http://www.transunion.com/business

Contact	Dave Blumberg TransUnion
E-mail	dblumberg@transunion.com
Telephone	312-972-6646

A chart accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/9cb06d5f-4c91-4819-bc5b-26b34fe91a9e

FAQ

How does TransUnion's rental tradeline data impact credit predictions for TRU?

TransUnion's analysis shows that including rental tradeline data enhances delinquency prediction accuracy by over 10%.

What is the significance of rent payment data for consumers according to TRU?

Rent payment data can help consumers build their credit history and improve their chances of securing credit.

When was the TransUnion rental tradeline data analysis released?

The analysis was released on December 7, 2021.

What does TransUnion recommend for landlords in relation to rent payments?

TransUnion encourages landlords to conduct rent reporting to make this valuable data more accessible.

What are lenders' views on using rent payment history in credit assessments for TRU?

Lenders, including Fannie Mae, believe that consistent rent payment history can indicate a consumer's ability to pay other credit obligations.