Stress Beneath The Surface: How To Stop The Pressure On Renter Finances From Hitting Multifamily

Consumers’ credit scores are falling at their fastest rate since the Great Recession. The high cost of living, the return of student debt payments and the continued strain of high levels of credit card debt are all weighing heavily.

This increase in financial pressures translates into higher rent collection risk for multifamily owner-operators, said Charlie Shelly, vice president of sales at TheGuarantors. They need to find ways to mitigate these risks before they impact bad debt and net operating income. 

“Renter finances are under strain as debt grows faster than income,” Shelly said. “Delinquency rates on credit card, auto and personal loans are at or near the highest levels in more than 15 years. For owners and operators, these are early signals of a broader financial strain that could impact rent collection, even if rent is at the top of most renters' credit stacks.”

In the second quarter, household debt stood at $18.4T, a 1% rise from Q1 and an increase of more than $4.2T since before the pandemic. Credit card debt of $1.2T is 5.9% higher than the previous year.

While borrowing is high, the delinquency rate for credit card debt was at its highest level since the financial crash in 2008.

“While rent is often the last payment to drop because people need a roof over their heads, they might only be one unexpected expense away from being unable to pay,” Shelly said. “Operators could find themselves with a growing amount of bad debt very quickly.”

On top of high levels of debt, credit card scores for many people are being driven down by the impact of student loan delinquencies. In May, the Department of Education resumed collection of federal student loan payments after having suspended referrals for collection since March 2020. 

As a result, as of April 2025, 10% of the population was 90 days or more overdue on student loan repayments in the previous six months, up from 7.4% in January. The 6.1 million consumers with student loan delinquencies saw their credit scores drop 69 points on average. 

Lower credit scores mean that people are less able to secure an apartment when operators use traditional screening methods. So while multifamily operators face an increasing risk that renters miss payments, they also have a shrinking pool of potential occupants, Shelly said. 

While some operators are tempted to lower their screening standards to increase occupancy, the danger is that they will attract renters who can't afford the rent. 

The answer is to use risk mitigation tools that can boost the potential pool of quality renters while providing financial security against bad debt, Shelly said.

“At TheGuarantors, we’re looking beyond traditional credit scores at things like cash flow, verified payroll information and micropatterns that are often precursors to delinquency,” he said. “When operators can recognize these signs early, they can take proactive steps, like offering flexible payment options or risk-mitigating lease guarantees, before missed rent becomes bad debt and lost net operating income.”

Operators have been using TheGuarantors’ solutions to maintain economic occupancy, Shelly said. This includes areas that have been hardest hit by falling credit scores and high credit card delinquency rates, such as the Sun Belt.

Compounding the situation is that many Sun Belt areas are facing an oversupply of multifamily units. Cities such as Charlotte, Phoenix and Austin are predicted to grow their apartment stock by 7% to 8% in 2025, a boost that will increase competition for renters. 

The best way to navigate changing market conditions in any location is to work closely with partners such as TheGuarantors to minimize financial risks, Shelly said. In the context of oversupply, such partners allow owners and operators to increase their renter pool and approve more nontraditional renters such as freelancers, foreign citizens and recent graduates without increased financial risk.

“We’re seeing the most successful operators focus on stability and predictability,” he said. “They’re using risk management tools such as our lease guarantee product to build financial resilience into their portfolios, so if and when market conditions deteriorate, their rent roll and net operating income remain steady.”

This article was produced in collaboration between TheGuarantors and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.