How to avoid defaults on rental housing

Rent a flat is an operation that involves a risk for the owner, who gave the use of a property in exchange for the payment of monthly payments which the tenant must face. If the unpaid tenant income, generates economic damage to the owner similar to that occurs when a client does not pay the monthly payments of the loan which granted the Bank.

Banks, however, have advanced tools that allow them to analyze the risk of non-payment of the customer, and on that basis a priori, decide whether they approve or reject the credit, if you require additional guarantees or whether to adapt the conditions of the loan to the possibilities of the client.

rental housing

There are currently many products to minimize the effects of a possible non-payment of rent: arbitration clauses, guarantees, insurance… However, the best solution is to make a good selection of the candidate and make sure that it will have sufficient resources to pay the rent. And to strengthen this point has emerged the portal and the ScoreINQ tool. With ScoreINQ, the first Scoring of tenants, was born a new way to manage the risk of rent using mathematical and statistical models that allow to know what risk of non-payment exactly presents a tenant candidate from their socio-economic profile information.

All this in very simple form and on-line via the web. Once the required data from the tenant have introduced the system determines a score ranging between 100 points (the worst tenants) and 970 (the best) through a Scoring specifically designed for this purpose that has an excellent level of prediction. To get an idea of the relevance of the score obtained just mention some results:

-One of every 4 tenants with less than 270 points presents serious problems of non-payment of rent.

-In contrast, only 1 in every 166 tenants with more than 900 points has problems of non-payment of rent (less than 1%)

Finally, thanks to an advanced system of artificial intelligence system gives recommendations on possible alternatives to mitigate the risk in this case being analyzed. This tool is the only one of these features in Spain. In other countries, such as United States, its use is widespread and is not conceived to rent without the tenant to request your report. The rental market is currently growing, but also its defaults. That is why it is more important than ever to make a proper process of selection of candidates, assess their risks and mitigate them using the products that are on the market.

WHAT IS A SCORING

A Scoring is a score that is obtained by applying a mathematical function to a set of information on the socio-economic profile of the tenant. The mathematical function is generated from advanced statistical processes on an anonymized database of tenants of which is already known if they paid adequately or not income from the House rented. In this way, the historical information is used to determine the profile of the tenant analysed on the basis of the information provided and determine your score that has associated a probability of default.

Scoring techniques are a tool widely used by banks and financial institutions around the world to control their risks, who have invested many resources in its development and maintenance. The current financial crisis has shown the importance not only of these systems, but ignores them avoiding the granting of high-risk operations which are those that have triggered this crisis.