Low-Income Tenants Can Get Credit for Paying Their Rent | Financial Buzz

Low-Income Tenants Can Get Credit for Paying Their Rent

How can we begin to eliminate the racial wealth gap in America? One way is to help consumers build their credit profile, especially for those who have poor credit scores or no credit scores at all. Opening doors to credit building opportunities can make a difference. Rent reporting—the reporting of tenants’ rental payments to the credit bureaus—is a proven credit building strategy that spurs economic mobility for low-income renters.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210622005440/en/

Fueled by years of positive rent reporting results, Credit Builders Alliance (CBA) is creating a Rent Reporting Technical Assistance Center (RRTAC) with underwriting support from Experian. This Center aims to reduce barriers for affordable housing providers to adopt this impactful strategy and foster the industry collaboration needed to scale it.

“CBA’s Rent Reporting Technical Assistance Center will function as a one-stop shop to assist landlords for low-income tenants. Coupled with extensive technical assistance provided by CBA, the affordable housing providers will have a road map and guidance for adding rent reporting to their operations,” said Dara Duguay, CEO CBA.

Unlike homeowners, renters historically have not gotten ‘credit’ on their credit reports for making their monthly housing payments. Many of these renters are also more likely to:

  • have lower-income and hold less wealth than homeowners:

    • renters account for nearly 60 percent of all U.S. households with incomes under $25,000 per year.1
  • be households of color:

    • Black and Hispanic households are twice as likely as White households to rent.2
  • lack enough credit history to generate a credit score:

    • renters are seven times more likely to be credit invisible compared to homeowners.3

For these households, lack of access to credit can inhibit their ability to overcome financial challenges and pursue economic mobility. Many have limited opportunities to build a credit history, which directly impacts their ability to get ahead in today’s economy. As a proven strategy for establishing and building credit, reporting rental payments offers low-income renters a safe and easy opportunity to build credit without taking on additional debt.

“At Experian, we believe everyone deserves access to fair and affordable credit,” said Craig Boundy, CEO Experian North America. “This CBA program is a tangible step in helping marginalized communities, and we are proud to work with them on this vital initiative. We look forward to partnering with CBA as we continue to innovate and explore new ways to improve financial inclusion for all consumers.”

Through its seminal 2012-2014 Power of Rent Reporting pilot, CBA found that 100 percent of residents who started off with no credit score became scorable at the near prime or prime level. Additionally, on average, residents with sub-prime scores saw those scores increase by 32 points.4

Fueled by these findings, policy makers in California are promoting rent reporting as a viable and powerful economic mobility strategy and one that narrows the racial wealth gap. California Senate Bill 1157 passed in 2020 and will require affordable housing providers (of a certain size) to implement rent reporting for their tenants–ultimately benefitting potentially hundreds of thousands of Californians. The RRTAC initiative will actively reach out to these landlords who must now comply with this new law.

Rent reporting is a win-win:

  • Residents gain the opportunity to build credit without assuming additional debt through the establishment of a new trade line on their traditional consumer credit report.
  • Resident Service Providers gain access to a credit building “product” around which they can wrap coaching and education to provide residents with a means to measurably improve their credit profile and ultimately other financial outcomes.
  • Property Managers gain a tool to offer a positive incentive for increasing on-time rent payments and a competitive advantage in recruiting new residents.

To learn more about the Rent Reporting Technical Assistance Center, visit www.rentreportingcenter.org

For more information regarding Experian’s education efforts, visit http://experian.com/consumereducation

About Credit Builders Alliance

Credit Builders Alliance serves as a unique and vital bridge between our nonprofit members and the major credit reporting agencies (CRAs). Through this support, CBA helps people who are outside the financial mainstream build credit to achieve their goals and enjoy financial security for themselves and their families. Our core services, CBA Reporter and CBA Access, provide nonprofits with both the ability and critical technical assistance to report loan data to the CRAs and to pull low-cost client credit reports for the purposes of financial education, outcome tracking and underwriting.

About Experian

Experian is the world’s leading global information services company. During life’s big moments — from buying a home or a car to sending a child to college to growing a business by connecting with new customers — we empower consumers and our clients to manage their data with confidence. We help individuals to take financial control and access financial services, businesses to make smarter decisions and thrive, lenders to lend more responsibly, and organizations to prevent identity fraud and crime.

We have 17,800 people operating across 44 countries, and every day we’re investing in new technologies, talented people and innovation to help all our clients maximize every opportunity. We are listed on the London Stock Exchange (EXPN) and are a constituent of the FTSE 100 Index.

Learn more at www.experianplc.com or visit our global content hub at our global news blog for the latest news and insights from the Group.


1 Consumer Financial Protection Bureau. (2017, September). Financial well-being in America. Retrieved from

http://files.consumerfinance.gov/f/documents/201709_cfpb_financial-well-being-in-America.pdf

2 American Community Survey, 2017

3 LexisNexis Risk Solutions. (2017). Moving to Financial Inclusion with Alternative Data.

4 Chenven, Sarah and Carolyn Schulte. (2015). The Power of Rent Reporting Pilot.

Contacts

Dara Duguay

Credit Builders Alliance

1 202 888 7588

dara@creditbuildersalliance.org

Scott Anderson

Experian

1 949 531 1783

scott.n.anderson@experian.com

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