Rent Butter Goes Well Beyond Credit Score

rent butter talks with clients
Natalie Clark (right) and Claire Conti from Rent Butter talk with clients during an industry trade show recently in Arizona.

New Approach Allows Rental Applicants to Show All Sources of Income

Rent Butter wants its clients to rent better, streamlining internal leasing operations and enhancing the renter’s and community owner’s screening experience.

Company founders Chris Rankin, a developer, and Tom Raleigh, an attorney, had been working in multi-family housing, largely serving the middle market on Chicago’s west and south side. They were part of a real estate firm that grew from 100 to 10,000 apartments in five years and learned pretty quickly that they needed a more efficient way to screen and communicate with prospects and renters.

Truthfully, they had become somewhat accustomed to application acceptance on little more than a credit score, as well as a high volume of turnover and eviction. They were certain there was a better way.

“What are your biggest pain points? We interviewed 50 landlords and they all said the same thing,” Raleigh said. “How do I assess risk when the applicant’s credit score is really low… it made sense for us to tackle that issue.

“If they make stable income and make their rent payment on time, what does the credit score matter?” Raleigh asked.

A great majority of the people who apply have the ability to pay their rent, Raleigh said, but what Rent Butter customers are looking for is the willingness to pay.

“We call that the ‘Grit Factor’,” Raleigh said.

Rent Butter’s digital application runs on a mobile phone and gets approval from the applicant to share banking information with the owner looking to rent. It looks at instances of non-sufficient funds and overdrafts, it measures income stability, timely rent payments, and positive or negative trends in revenue and account balance.

“Really we give every landlord two reports,” Rankin said. “We give them the banking report, and credit behavior report. The real question is how they’re trending, not whether they have a 670 credit score but are they trending up to 720 or down to 550?”

“You can see the financial and credit trends are positive in this example,” he said. “The interface is easy to understand, and it really draws your eye to what’s important.”

They pull in info on defaults or late accounts that have yet to hit the credit score — 634 credit score six months later can be below 600 with a bad couple of months. All of the information flows into Rent Manager, for instance, and other large property management software solutions.

“The decades of hard work our industry has put into place has been very rewarding,” Raleigh said, for the property owner and management team, as well as the renter.

How Rent Butter Improves Resident Experience

“We make it really easy to apply,” Raleigh said. “Go on your phone and apply in five minutes.” The easier it is for someone to apply, the more applications the property owner will receive.

The more common rental application is five or six pages to look over. With Rent Butter, the applicant uploads an image of their ID card or driver’s license and completes the rest on their mobile phone in just minutes.

“Our ID verification tool is like airport technology at your property,” Raleigh said. “Their ID can be scanned and validated in real time.”

Pay stubs can be shared easily, and if no pay stubs are available, the user can provide secure access to their bank account.

“Connect your bank in real time, permission is granted and Rent Butter goes in to extract the needed data for the property owner,” Raleigh said. “It asks the applicant ‘Of all of these deposits, which ones are income?’ You click a box to confirm deposits that are earned income.

“Gig work and side hustles are included, so the applicant finally has a way to show their true income,” he said.