As a landlord, one of your primary goals is to find high-quality tenants, often leveraging a credit check service to determine creditworthiness. But it’s not always easy, especially if your applicant is a with a foreigner or international student?
What happens if they don’t have a Social Security number?
What do you do when you have an applicant who recently moved to the U.S. and doesn’t have a Social Security number? Or they were recently issued a Social Security number, so there is limited US credit data behind it?
Immigrants are everywhere
This challenge is only growing. Immigrants make up nearly 14 percent of the U.S. population, and are expected to drive 74 percent of all U.S. population growth by 2065. Each year, 2 million immigrants arrive in the U.S., and 75 percent of these new arrivals are looking to rent. 45 percent of foreign-born arrivals are college educated; they often move to the U.S. for jobs, command high salaries, and have good credit history overseas.
Foreign credit doesn’t mean bad credit
The highly educated foreign-born tend to command higher incomes and have prime or super-prime credit. However, because they can’t carry over their credit history from their home countries, they have thin credit profiles in the U.S., and are locked out of the U.S. rental market. And while they are credit-worthy and make for high-quality borrowers, it makes it difficult for new-to-country residents to rent an apartment.
In turn, it makes it challenging for landlords to rent to these ideal tenants. Landlords are forced to go through a highly manual, tedious process to pull together disparate documents to understand the applicant’s creditworthiness, often relying on things like utility bills, income statements, bank statements, and alternative data that may be in a foreign language and currency.
There is one company that provides international credit reports to independent landlords. Nova Credit is a cross-border credit bureau that provides instant access to international credit profiles.
Nova Credit pulls data from leading international credit bureaus such as Experian, TransUnion, Equifax, CRIF, and Circulo de Credito. It’s free for property managers, and allows for real-time screening of international resident applicants.
Similar in format to a standard U.S. consumer credit report, the data is post-processed to be compliant with U.S. regulation and is standardized across countries.
The Credit Passport includes:
- U.S. equivalent credit score
- Aggregate risk attributes
- Tradelines and repayment history
- Derogatory marks
- Aggregate statistics
- Additional data such as bureau notices, inquiries and employment history
By accessing international credit reports, landlords can better identify high-quality, foreign-born applicants. By unlocking foreign credit data in the U.S., property managers and landlords are able to:
- Increase occupancy rates. Convert highly qualified applicants seamlessly to maximize net operating income (NOI).
- Reduce operational costs. Decrease the amount of time and money spent manually screening applicants.
- Improve risk management. Distinguish between good and bad tenants to ensure great long-term tenants across your portfolio. In turn, you can better manage risk and reduce bad debt across your portfolio.
Accessing an international credit profile also benefits foreign-born applicants. New-to-country applicants may also be able to remove approval conditions such as paying a higher deposit, securing a guarantor / co-signer—or worse, being overlooked entirely because of a lack of U.S. credit history.
Harnessing new technology and reliable data, international credit profiles can help save time and money for property managers and tenants alike. It’s a win for both parties.