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Renter credit activity remained healthy last year, despite the challenges of the COVID-19 pandemic, according to a new study from TransUnion.

The “2021 Rental Housing Financial Impact Study,” which includes analysis from nearly 3 million individuals and more than 10,000 properties between 2016 and 2020, found that the percentage of renters with an account more than 60 days delinquent last year remained within historical ranges—dropping to 23.1% at the end of 2020 from 24.7% at the same time the prior year. According to TransUnion, a slight rise in the delinquency levels is expected this year but still will remain within the historical ranges.

In addition, the study found that due to lockdowns in place, renters also may have been paying down debt with discretionary income, which historically has been used toward travel, dining, and retail purchases. This, as well as other positive credit activity, has resulted in the average ResidentScore 3.0—TransUnion’s proprietary rental scoring model to predict the likelihood of future evictions and skips— to increase 7 points last year, closing at 668 at the end of December.

“TransUnion’s newest research allows property managers to make informed decisions at a time when information on renter financial health and the ability to pay rent are still unclear,” said Maitri Johnson, vice president of TransUnion’s tenant and employment business. “Macroeconomic indicators, such as elevated unemployment, would suggest a more challenging rental market, but our study points to a positive 2021 outlook. This comprehensive research will enable more trustworthy interactions between property managers and renters, benefiting the industry at a time when incomplete reports could bring forth a whole different set of challenges.”

The findings also suggest that while renters may be relying on their credit cards to meet their obligations, this practice is not detrimental. Renters reduced their overall debt levels on average by $542, down -1.7%. TransUnion expects total debt of renters and credit card utilization to decrease by -1% and -4.6%, respectively, by the end of this year.

“If renters are paying more frequently with credit cards, they have either greatly reduced their overall discretionary spending or are consistently paying off their credit card debt. We have not seen a disproportionate increase in new credit card accounts being opened, so the reduction in credit card utilization is most likely not due to increased levels of available credit,” said Johnson.

While most news in the study was positive for the rental market, challenges still exist. TransUnion’s “Financial Hardship Study” from late November found that 31% of financially impacted consumers reported they were concerned about the ability to pay their rent. In addition, there was an elevated percentage of renters with some form of credit account in acute relief status, meaning they were not making payments on accounts such as credit cards or car loans. That number increased from 0.3% in March 2020 to 7.3% in June 2020. By the end of the year, it had decreased to 3.6% of renters and is projected to remain around this level during the first part of 2021.

“There is no doubt that many Americans, including renters, have been negatively impacted by COVID-19 either directly or indirectly. When key metrics are viewed in a vacuum, much of the information available would support a gloomy outlook for renters in the future. However, our credit metrics and studies reflect that generally renters are positioned well to exit the pandemic, but there remains a tremendous amount of unknowns at this time,” said Johnson. “Our belief 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.”