Fannie Mae launches program to help renters boost their credit scores

Dive Brief:

In an effort to help renters build their credit history and improve their credit score, Fannie Mae launched its Multifamily Positive Rent Payment Reporting pilot program in late September.
The program allows eligible multifamily owners to share rent payment data through a vendor network to the three major credit bureaus for incorporation into the renter's credit profile.
For a 12-month period, Fannie Mae will cover the costs of collecting and disseminating rent payment data for the agency’s multifamily borrowers who use one of the three approved vendors — Esusu Financial, Jetty Credit or Rent Dynamics — to collect the rent payments. The three companies will then format it for dissemination to the credit bureaus.

Dive Insight:

Unlike homeowners’ mortgage payments, rent payments are generally not included in credit reports and don’t contribute to renters' credit scores.

By introducing positive rent payment reporting, Fannie Mae hopes to accelerate the adoption of rent payment reporting in the apartment industry. Through its desktop underwriter platform, the agency already helps lenders incorporate positive rent payments in the single-family mortgage credit evaluation process.

Fannie says the program has the potential to help historically underserved groups who disproportionately have lower or no credit scores.

"Around 20% of the U.S. population has little to no established credit history, a group in which Black and Latino/Hispanic people are disproportionately represented,” said Michele Evans, executive vice president and head of multifamily for Fannie Mae, in a press release. “Of the consumers who do have a credit score, a disproportionate number of Black consumers have a subprime credit score. These imbalances reinforce racial disparities in access to credit and quality affordable housing among renters and homeowners,"

Without a sufficient credit history, renters have more difficulty in accessing housing in higher-opportunity neighborhoods, obtaining a mortgage and attaining lower-cost credit, such as auto loans and education financing, according to Evans.

“By enabling easier and more expansive adoption of positive rent payment reporting, we can knock down this long-standing barrier to building credit and help more consumers begin to establish a strong financial and credit foundation,” she said in the release.

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