A controversial service that would alert apartment firms when their residents apply for a lease elsewhere is being considered by credit bureaus and providers of applicant screening services as a way to guard against so-called "skips": residents who walk out before the legal expiration of their lease.

Similar services now available in Australia have encountered privacy complaints from tenant rights organization even as they are embraced by property operators consistently left holding the bag by vanishing occupants.

The alerts are simply an extension of services already provided by most applicant screening companies. In addition to providing clients with database information on the credit worthiness and rental history of lease applicants, the screening firm would simultaneously notify its existing clients who are landlords of record when a resident is attempting to initiate an application with another apartment community. Concord, NSW-based TICA, which operates Australia’s largest tenant database, has been offering the “Virtual Manager” alert free of charge to its 6,000-plus landlord clients since mid-2010.

“It is something that we have considered as part of RentBureau,” says Brannan Johnston, vice president and managing director of Costa Mesa, Calif.-based Experian RentBureau. “Alerts could be ideal from that standpoint, since we have data contributed by property managers every single day on their residents and rental payment history, and we provide that data to resident screeners when someone is applying for a lease. There might be a nice intersection to provide that kind of a service.”

According to Johnston, Experian RentBureau feels that more needs to be done in terms of legal and regulatory compliance investigation before a service is offered in the United States, particularly with how such a service would adhere to "permissible purposes" as outlined in the Fair Credit Reporting Act. “It is not something that we are doing just yet, but it is something that we have thought about in terms of a risk trigger to help our clients if someone looked like they were skipping. I don’t think, however, that it would be a service that we would offer if someone was merely looking for an apartment within a month of their lease running out.”

Other multifamily applicant screeners were either mum or nonplussed on applicant alerts. While Chicago-based TransUnion had no comment, Rockville, Md.-based CoreLogic SafeRent officials said its client base has been reticent to incorporate skip alerts. “I’m not sure that’s an advantage for a company on the marketing side. It seems to be more of an advantage on the tip side, and companies don’t seem to want to give other firms an alert regarding a prospect that might be sitting in front of them,” says CoreLogic SafeRent vice president of business services Jay Harris. “We monitor to make sure that individuals have not defaulted on other properties and other owners, but our clients have said they are not interested in giving the backend advantage that allows the existing competitor an opportunity to retain that resident applicant.”

While Experian continues to evaluate alert services, the firm is keeping busy implementing rental history into generic credit reports and credit scoring. Available since mid-December and slated for an official launch the first week of January, Experian will be the first major U.S. credit bureau to incorporate rental payment history into its consumer credit report products and services. “We acquired RentBureau back in June 2010 and have been working since then to create a feed from RentBureau into the traditional credit report, so we’re pleased to be the first major credit bureau to use rental payment data in our credit reports,” Johnston says. “Given that close to a third of the U.S. population rents, we thought it was imperative to reflect the true credit worthiness of renters.”

That creditworthiness has remained consistent over the past two years despite the recession, says Harris at CoreLogic SafeRent, which will host a webinar on multifamily renter credit quality on January 27. “The scores are largely where they were two years ago, and in Class A, they have even gone up. At the same time, operators are qualifying about 2 percent to 3 percent more applicants than they were in 2008.”