SOURCE: TransUnion

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September 29, 2015 06:00 ET

TransUnion Analysis: Rental Applicant Risk Profile May Be Plateauing While Rental Prices Continue to Rise

CHICAGO, IL--(Marketwired - September 29, 2015) - A new TransUnion (NYSE: TRU) Rental Screening Solutions industry report found that the credit risk level of rental applicants may be plateauing after recent yearly improvements. Between Q2 2014 and Q2 2015, the average ResidentScore increased by 0.2%. ResidentScore is TransUnion's proprietary tool for assessing a rental applicant's risk level and is evaluated on a scale of 350 to 850, with a higher score indicating lower risk.

While the ResidentScore marginally improved from 669 in Q2 2014 to 671 in Q2 2015, the year-over-year growth was much lower than the 0.9% yearly rise observed in Q2 2014. The rural regions of the country experienced the most prominent ResidentScore growth slowdown. In Q2 2014, ResidentScores grew 0.77% in rural areas. By Q2 2015, the ResidentScore growth dropped to 0.02%, the smallest increase of any community.

"While rental applicant risk levels improved sharply in 2014, we're seeing a slowdown in the level of improvement during the first half of 2015, particularly in rural areas," said Michael Doherty, senior vice president of TransUnion's rental screening solutions group. "Property managers are benefitting from a strong rental environment with higher rents and improved resident risk levels, but they should continue to use rental screening intelligence to ensure they are properly assessing the profitability of potential residents."

Dense urban areas had the highest ResidentScore (681) and largest growth rate (0.41%) of all population types. However, dense urban populations still experienced a slowdown in scores compared to 2014. In Q2 2014, the average ResidentScore grew 1.42%.

 
Average ResidentScore by Population Density
   Q2 2014  Q2 2015  Pct. Change Year-over-Year
Dense-Urban  678  681  0.4%
Urban  660  663  0.3%
Suburban  664  665  0.2%
Rural  671  671  0.02%
United States  669  671  0.2%
Source: TransUnion Customer Population
 

The nation's largest cities outpaced the national ResidentScore growth in Q2 2015. Dallas, Los Angeles and Washington, D.C. experienced the largest growth with 0.6% change year-over-year.

 
Average ResidentScore for Select MSAs
   Q2 2014  Q2 2015  Pct. Change Year-over-Year
Dallas  642  645  0.6%
Denver  669  672  0.5%
Los Angeles  666  670  0.6%
Washington D.C.  677  681  0.6%
United States  669  671  0.2%
Source: TransUnion Customer Population
 

Of the cities analyzed by TransUnion, Denver experienced the slowest rate of ResidentScore growth. ResidentScores grew 0.5% from 669 in Q2 2014 to 672 in Q2 2015, while rental prices also continued their steady increase. Rental prices rose 13.9% to $1,149 in Q2 2015 in Denver, up from $990 in Q2 2014. TransUnion's report also observed the highest average national rental price in five years in Q2 2015. The average national rent increased 4.6% to $872 in Q2 2015, up from $834 the previous year.

 
Average Rental Prices for Select MSAs
   Q2 2014  Q2 2015  Pct. Change Year-over-Year
Dallas  $1,135  $1,164  2.4%
Denver  $990  $1,149  13.9%
Los Angeles  $1,139  $1,178  3.4%
Washington D.C.  $1,391  $1,454  4.3%
United States  $834  $871  4.6%
Source: TransUnion Customer Population
 

"As property managers begin to report rental payments on their residents, we'll likely see a continued increase in the average ResidentScore," said Doherty. "Rental payment reporting is beneficial for property managers, who are able to attract higher quality residents, and for renters, who can see their on-time monthly rental payments reflected on their credit report."

A TransUnion survey in June 2015 found that six in 10 property managers who report rental payments said it has moderately or strongly helped to attract reliable residents. TransUnion launched its complimentary solution for reporting rental payment information in summer 2014.

For more information about TransUnion's ResidentScore, visit http://rentalscreening.transunion.com/solutions/residentscore.

About TransUnion (NYSE: TRU)

Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

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