Property managers should be wary of rental applicants with an unusually high number of recent credit inquiries, according to a new research report from TransUnion (NYSE: TRU).
The report found applicants with 15 or more credit inquiries in the seven days prior to applying for a lease showed the highest rate of charge-offs within one year, at 32%, compared with nearly 9% for the overall sample. Another leading indicator was having eight or more credit inquiries within four days, which the report said was evidence of the predictive strength of unusually high inquiry activity.
For the report, TransUnion analyzed more than 1.1 million renters who moved during 2024 and tracked charge-offs within one year after moving as a proxy for fraud-related risk. Other significant renter fraud activity including having a truck stop as a current address, an extended fraud alert on file, and the listing of a governmental phone number.
The research also tracked which major metro areas recorded saw the highest amounts of fraud indicators among their renters compared to the national average. Detroit ranked first with 6.7%, followed by Atlanta (6.1%) and Houston (5.6%). Other metros with higher fraud alerts included Phoenix (4.9%), Los Angeles (4.4%), Chicago (4.2%) and San Francisco (4.1%).
“The average rental housing provider writes off nearly $1 million in bad debt due to fraudulent rental applications,” said Maitri Johnson, senior vice president and head of tenant and employment screening at TransUnion. “These findings help property managers focus on the warning signs most associated with elevated risk and make more confident screening decisions. Strong screening and fraud technology tools are a must in today’s environment for property managers to spot fraud before it’s too late, and income verification can serve as an important first line of defense.”
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