Nancy Atwell [1], the Multifamily COO and SVP for Fannie Mae [2], has authored a new Perspectives Blog post focusing on renters and their credit reports using data from a new poll that found a sound majority of renters want their rent payments to count towards improving their credit file kept by the three credit bureaus.
Rent, oftentimes people’s largest recurring expense, is not currently tracked by standard credit monitoring methods and credit scores play a huge factor in the ability to pursue financial and economic opportunities such as obtaining a car loan, mortgage, credit card, or even student loans.
The survey, which was conducted online, data further revealed that renters place significant value on their credit scores:
- 87% of respondents believe that having a good credit score is important
- 82% of renters who always pay their rent on time reported that they would expect to see an immediate increase in their credit score if rent payment history was included
- 79% recognize that having a higher credit score will provide them with greater financial opportunities
- 78% agree that their credit score would be more consistent if rent payment history were included
According to Fannie Mae, crediting renters for on-time rent payments would promote greater financial stability, setting renters up for a brighter financial future. Fannie Mae Multifamily has been helping renters build their credit though a new pilot program called Positive Rent Payment.
Partnering with three financial technical firms—Esusu Financial, Inc [3]., Jetty Credit [4], and Entrata [5] (recently acquired Rent Dynamics)—to report positive rental payments to credit bureaus which can help renters establish, maintain, and improve their credit scores.
Seeing positive results all around, Fannie Mae is extending said pilot program through December 2024. This program will cover the costs of collecting and disseminating rent payment data for another 12-month period for multifamily property owners with Fannie Mae financed properties.
Building credit can help alleviate challenges that limit a renter’s ability to secure quality rental housing and can help them achieve their financial goals. The extension of this program supports Fannie Mae’s objective to accelerate the adoption of rental payment reporting across the industry as a whole to promote greater housing equity.
As of September 2023, over 100 property owners, 2,170 properties, and 435,000 units have enrolled in the pilot. So far, we have seen:
- 240,000 participants reporting their rent payments
- 23,000 credit scores established
- Nearly 58% of participants have increased their credit scores, and participating renters who already had a credit score and saw an improvement had an average increase of up to 40 points
Click here [6] for more information on Fannie Mae’s rent reporting pilot program.