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Examining Renter Credit Risk Patterns

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Examining Renter Credit Risk Patterns

December 1, 2017
Photo: Pexels

Rental management companies are taking credit history and debt-to-income ratios more seriously as the share of renting households has risen to roughly 36 percent, a fifty-year high.

Similar to a FICO score, CoreLogic's SafeRent Score measuring applicants by a variety of factors such as subprime loan history, eviction and rental collections history, and application information. Higher SafeRent scores mean lower risk; average scores have been rising since 2010. A higher rent-to-income ratio is typically seen as an increased credit risk, with renters allocating more of their income to paying rent. 

The rent-to-income ratio has trended upward between 2009 and 2017, as the increase in rents has outpaced income growth. Nationally, it has increased from 25.4 percent in the second quarter of 2009 to 28.1 percent in the second quarter of 2017, a 10.6 percent increase over an eight-year period. 

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