Less Credit Usage by Renters Indicates Stabilizing Market

Key Highlight

• TransUnion’s 2021 Rental Housing Financial Impact Study shows renters using less credit
• This latest study indicates most renters able to pay their rent during 2020

Latest Rental Financial Impact Study Points to Positive 2021 Outlook

TransUnion offers consumers and industry professionals alike the current research, information and trends in credit and identity protection.

TransUnion brought good news when it released its latest 2021 Rental Housing Financial Impact Study last week.  During the height of the pandemic, some 40M renter households were at risk of eviction. The average tenant owed $5,400 in past due rent.  Now, despite continued lack of clarity on the ability of tenants to pay rent, TransUnion’s study points to a positive 2021 outlook.

TransUnion Research Found Delinquency Rates Decreased from 2019 to 2020

Based upon four-years of tenant and property data, this latest TransUnion research indicated that the 60-day delinquency rates decreased –1.6% from December 2019 to December 2020.  The average tenant’s debt total balance also decreased from $31,113 to $30,592 during this same time period despite the delinquency rate increasing slightly in Q4 2020 to Q1 2021.

Renters have been found to use their discretionary income for necessities like rent and/or debt repayment, not “extras.”  As a result, the average credit scores for tenants increased +7 points to 668.

Tenants Reduced Credit Card Usage by -4.6%

According to Maitri Johnson, TransUnion Vice President of Multifamily, “If renters are paying rent more frequently with credit cards, they have either greatly reduced their overall discretionary spending, or are consistently paying off their credit card debt.”

Renters Credit Usage Trends Suggest Stronger Rental Market in 2021

As in 2020, research shows that renters are continuing to watch their spending into 2021.  Additionally, as in 2020, renters are continuing to take advantage of loan deferrals or forbearance plans to cover their housing costs.

At the height of the pandemic, 7.3% of renters utilized loan deferrals or forbearance plans.  Now, just 3.6% of renters are utilizing forbearance plans or loan deferrals. Such a drop signals that tenants’ financial outlooks and lives are improving.

TransUnion Study Expresses Optimism Regarding Rental Marketplace

Conclusions based upon less credit usage by renters are still unclear but, Johnson believes that “…renters are positioned well to exit the pandemic…” on their feet.  She added, “Our belief is that the rental marketplace is set up for growth, even with the new development inventory coming out of the ground that will benefit both renters and property managers.”

Thanks to TransUnion and Inman News.

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