Rent Reporting for
Credit Building
Home Forward: A Case Study
Funded by:
Meyer Memorial Trust
Implemented by:
Credit Builders Alliance
Home Forward
Innovative Changes
CFED
Acknowledgements
This Rent Reporting for Credit Building program was funded by the Meyer Memorial Trust and
developed through a partnership between Credit Builders Alliance, Home Forward, Innovative
Changes, and CFED.
About the Meyer Memorial Trust
The Meyer Memorial Trust works with and invests in organizations, communities, ideas and efforts that
contribute to a flourishing and equitable Oregon.
About Credit Builders Alliance
Credit Builders Alliance (CBA) is a national nonprofit social enterprise dedicated to increasing the
capacity of a diverse and growing network of hundreds of nonprofit member institutions throughout all
50 states and Puerto Rico to help low- and moderate-income households and businesses build credit
and financial access, which, in turn, support the growth of businesses and personal assets. CBA was
created by and for its nonprofit members in response to a serious gap in the modern credit reporting
system that locks millions of individuals with poor or no credit out of the financial mainstream, often
leaving them without safe, accessible, or affordable products. For more information, visit
www.creditbuildersalliance.org.
About Home Forward
The mission of Home Forward is to assure that the people of the community are sheltered. Home
Forward has a special responsibility to those who encounter barriers to housing because of income,
disability or special need. Home Forward will continue to promote, operate and develop affordable
housing that engenders stability, self-sufficiency, self-respect and pride in its residents and represents a
long-term community asset. Home Forward will be a community leader to create public commitment,
policy and funding to preserve and develop affordable housing.
About Innovative Changes
Innovative Changes (IC$) is a nonprofit Community Development Financial Institution loan fund that
provides financial education, small-dollar consumer loans, and access to credit building
techniques and asset-building opportunities.
About CFED
CFED’s (www.cfed.org) work makes it possible for millions of people to achieve financial security and
contribute to an opportunity economy. We scale innovative practical solutions that empower low- and
moderate-income people to build wealth. We drive responsive policy change at all levels of government.
We support the efforts of community leaders across the country to advance economic opportunity for
all.
2016 by Credit Builders Alliance
Published in the United States of America
© 2016 by Credit Builders Alliance
All rights reserved
2
Table of Contents
Executive Summary
4
Program Overview
7
Program Results
9
Methodology
9
Credit Profile Changes
9
Credit Seminar Impact
10
Implementation Lessons Learned
11
Program Sustainability
13
Starting a Rent Reporting for Credit Building Program
13
Conclusion
14
Appendix 1: Rent reporting impact analyses known to CBA
3
Executive Summary
Over one third of U.S. households live in rental housing,1 and that percentage is even higher for
families at the lower end of the income spectrum. Many of those low-income renters are
among the 100 million U.S. consumers with no, thin or subprime credit and who lack
opportunities to establish or build credit. Historically, only homeowners have been able to build
positive credit histories when making housing payments on time. This matters. A good credit
score can save a person tens of thousands of dollars in interest and fees over the course of a
lifetime and it can make the difference in access—or lack thereof—to safe housing,
employment and asset-building opportunities like starting a small business and owning a home.
Without rental trade lines, credit reports and credit scores may present an incomplete and
negatively skewed assessment of the credit risk posed by many renters, particularly low- and
very-low income residents living in public housing and striving to successfully join the financial
mainstream.
Fortunately, there is a now a proven and cost-effective way for these renters to benefit from
the same credit building opportunities afforded to homeowners through the inclusion of ontime rent payments as valid trade lines on traditional consumer credit reports (view the results
of Credit Builders Alliance’s 2012-2014 Power of Rent Reporting Pilot). Rent reporting provides
a chance for renters to build credit without taking on additional debt or incurring the burden of
an additional monthly expense. And now, progressive public housing authorities that have long
recognized the importance of empowering residents to move toward economic
independence—such as Home Forward (HF) in Portland, Oregon (formerly the Housing
Authority of Portland) are naturally looking to implement rent reporting programs.
In April 2015, Credit Builders Alliance (CBA) received a generous grant of $40,000 from the
Meyer Memorial Trust to work with three entities: Home Forward, to furnish resident rental
data; Innovative Changes (a local partner nonprofit), to provide credit education; and CFED (a
national asset building nonprofit), to help assess resident credit and other outcomes. The
primary objective was to implement a responsible rental payment reporting initiative. Like
traditional loan data reporting, CBA considers rent reporting to be a responsible financial
capability strategy when combined with credit education to help establish and/or improve
participant credit profiles.
This initiative was piloted at one of Home Forward’s Hope 6 properties—Stephens Creek
Crossing — for a group of low-income residents participating in its Family Self-Sufficiency
program, GOALS (Greater Opportunities to Advance, Learn and Succeed). The GOALS program
provides Home Forward residents with ways to set and reach their goal of becoming selfsufficient through five years of dynamic supportive services. GOALS has helped many families
with job training and referrals, getting a better job or promotion, child care referrals and even
1
AMERICA’S RENTAL HOUSING: EVOLVING MARKETS AND NEEDS, Joint Center for Housing Studies of Harvard
University, 2013.
http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/jchs_americas_rental_housing_2013_1_0.pdf
4
homeownership. This program offers a solid pathway for financial independence and selfsufficiency and features creative ways to help participants save money to achieve their longterm goals. The introduction of credit building through rent reporting as a strategy to enhance
self-sufficiency outcomes is a natural fit given the program’s purpose. To date, Home Forward
has successfully enrolled 67 residents, 28 of whom are currently having their rental payments
reported.2 The remaining 39 enrolled in the program are expected to have their rents reported
in the coming months, and once the benefits of rent reporting spread by word of mouth across
the property, Home Forward expects to see even more residents enroll.
To leverage the rent reporting as a financial capability strategy, Innovative Changes was
contracted to provide credit education to residents enrolled in the program as well as to others
who might be interested at a later date. Innovative Changes designed a custom, four-part credit
workshop series that covered:
1) The importance of having a good credit history, how building credit through rent
reporting can help households achieve and sustain short- and long-term goals
2) How to dispute errors on credit reports
3) How to negotiate with creditors to settle debts
4) Best practices in monitoring and leveraging improved credit over time to achieve goals
CBA also contracted with CFED to help assess credit and other program outcomes of the
initiative. With input from CFED, CBA, Home Forward and Innovative Changes decided to track
not only credit score changes and debt reduction levels, but also implementation lessons
learned. CFED conducted interviews with residents participating in the pilot, as well as Home
Forward and Innovative Changes staff, about their respective experiences with the program. In
addition to the pre- and post-surveys, these interviews will help inform future iterations of the
pilot with respect to outreach and marketing, program design and overall program success.
Although the sample size is small, the credit profile change results in this program are
consistent with what CBA found in its Power of Rent Reporting pilot, funded by the Citi
Foundation from 2012 – 2014. In that pilot, Experian RentBureau analyzed 987 participants’
credit files, isolating the impact of rent reporting by scoring their reports with and without the
rental trade line at a particular moment in time. In that case, as in this program, 100% of
residents without a credit score prior to reporting had one after the rental trade line was
added, and a large majority of residents saw an increase in score. These data are also reflective
of results found in other cases (see Appendix 1 for a list of rent reporting research known to
CBA at this time). As a result, the preliminary results in Home Forward’s program show
consistent promise for continued success:
2
Innovative Changes was only able to obtain written authorization from 18 of the 28 residents at the time of this
report. The data below reflects the average changes among those 18.
5
Rent reporting offers a significant credit-building opportunity to residents living in public
housing. Of the eighteen residents whose credit reports were pulled prior to and after the
rent reporting trade line was added at the time of this report:3
o Sixteen participants started with a credit score and two were unscored.
o The average score change among all sixteen participants who started with a
score was a 34 point score increase.
While four of the sixteen experienced a credit score decrease, of the 12
whose scores went up the average increase was 57 points.
Among the sixteen participants with a credit score, the average score
prior to rent reporting was 579 and the average score after rent reporting
was 613.
o The two participants who started out unscored obtained scores averaging 616.
Rent reporting is seen by renters as a great opportunity for credit building and, paired with
credit education, is a powerful financial capability strategy for public housing
authorities seeking to help their residents achieve financial stability.
o 100% of residents who participated in credit education seminars stated that they
were likely or very likely to consider their credit when making future financial
decisions.
It is important to assess residents’ interest in participating in rent reporting for credit
building, but it is equally important to determine their readiness. Reviewing credit reports
and rent rolls as part of the enrollment process is helpful to determining whether there is –
and how best to deal with -- any outstanding payment issue(s) that the resident may want
to address with creditors or with landlords that the resident may not even know exists.
CBA, Home Forward, Innovative Changes and CFED expect this pilot to serve as a model for
other public housing authorities hoping to directly report rental payments and partner with
local nonprofit experts to integrate credit education as a powerful credit building and financial
capability strategy.
3
Over the course of the program, residents experienced other changes to their credit histories and reports that
may have impacted their scores, both positively and negatively. CBA contends that there is a direct correlation, but
does not claim direct causation, between the addition of the rental trade line and the overall positive impacts.
6
Program Overview
The goal of this program was to show that rent reporting, in combination with education
support, is an effective strategy to help improve the credit and financial capability of very lowand low-income residents. To accomplish this, CBA worked directly with Home Forward over
the last year to guide them through the process of becoming a data furnisher to Experian, one
of the major credit bureaus, in order to report their residents’ rental payments for the purpose
of credit building. To become a credentialed data furnisher, Home Forward submitted an
application to Experian RentBureau and completed an assessment and testing process during
which Experian RentBureau tested Home Forward’s rental data to ensure its integrity and
accuracy.4
At the program’s outset, CBA and Home Forward staff determined that the best initial internal
target market for the rent reporting program were GOALS residents living at Stephens Creek
Crossing. The GOALS program is designed to support low-income individuals and families to
reach their goal of becoming self-sufficient through five years of supportive services.
Understanding how critical a good credit history can be to all of these supportive services-including but not limited to finding jobs, getting promotions, owning a home, and more -- Home
Forward immediately saw the value that offering a rent reporting for credit building initiative
could offer. GOALS participants were introduced to rent reporting during one-on-one visits with
Home Forward staff. As of this report’s publication date, 67 residents have signed up to have
their rents reported. Based on the results of this program, Home Forward will continue to
explore additional opportunities to introduce more Stephens Creek Crossing residents outside
the GOALS program–as well as residents at other Home Forward properties--over time,
including at lease-signing and renewals and income re-certifications.
Innovative Changes, a local nonprofit Community Development Financial Institution (CDFI) loan
fund and financial education expert, was contracted as a third party to provide credit education
to Stephens Creek Crossing residents enrolled in the initiative. Using its model for delivering
high-quality seminars on a larger scale, residents were invited to participate in four separate
workshops as part of a larger seminar series, not only to learn, but to share experiences to build
credit--and also community. Each workshop session was designed as a natural progression from
the previous session, but also made sense as a stand-alone lesson if a resident could not attend
all four workshops. A total of 75 Home Forward residents participated in Innovative Changes’
4
Once a month, Home Forward creates a customized report from its property management software, which is
transmitted to Experian RentBureau (a division of the larger credit bureau, Experian) for inclusion on individual
residents’ Experian credit reports. This rental data must be submitted and managed in compliance with the Fair
Credit Reporting Act, which requires Home Forward to:
• Maintain accuracy and integrity at all times
• Continue to furnish information on a monthly basis
• Report payments
• Notify residents of delinquent payment history that could be reported to the credit bureaus
• Investigate and update inaccurate information that has been submitted accidentally
7
four-part credit seminar series (each workshop was offered twice between August 2015 and
February 2016):
•
Introduction to Rent Reporting provided foundational information about rent reporting and
the importance of credit and how it affects our everyday life. Innovative Changes went over
the key drivers of credit scores and the importance of paying bills on time, highlighting that
rent reporting offers a unique and simple way to build credit. Prior to this workshop,
Innovative Changes pulled credit reports for each workshop participant and during the
workshop participants completed a “credit action plan” using their own information.
•
Disputing Errors focused on disputing errors on credit reports, with Innovative Changes
providing information on how to write and examples of dispute letters. Additional
information was presented about using caution when making payment arrangements with
collection agencies and the credit profile and financial benefit of saving up to make lump
sum settlements.
•
Negotiating with Creditors included a role-playing exercise with participating residents to
practice negotiating settlements with creditors and exercising their consumer rights.
•
Monitoring and Protecting Credit brought all the pieces back together to help residents
review the progress they had made over the course of participating in the seminars, and
imparting the importance of monitoring their credit over time to prevent identity theft and
continue to successfully manage their credit profiles.
Drawing on its expertise evaluating and documenting best practices in the field, CFED
conducted interviews with residents and staff from Home Forward and Innovative Changes to
obtain their self-assessments of how the program was of benefit to them.
8
Program Results
Methodology
Qualitative information was gathered from Home Forward, Innovative Changes and
participating residents through program-related meetings, individual interviews, and pre- and
post-seminar surveys. Quantitative data was tracked for eighteen of the twenty-eight residents
whose rents are currently being reported via credit reports acquired from Experian by
Innovative Changes at two instances: once prior to rent reporting and once after rental
payment trade lines were loaded onto their credit reports. These residents signed written
authorizations granting Innovative Changes permission to access these reports. The credit score
used in this analysis was VantageScore 3.0. While score increases may be attributable to the
addition of the rental trade line, there are various other factors that may have impacted each
individual’s scores between the first and second credit pull. These include things like an
increase in revolving credit availability, decreases in past due amounts and in two cases, the
removal of old public records from the credit report. To track changes in knowledge and skills
and to assess the likelihood of adjustments, Innovative Changes also used pre- and postseminar surveys.
Because of the self-selection bias resulting from the requirement to obtain residents’ written
consent, the program also offered some limited insight into how rent reporting influenced
residents’ payment behavior. Home Forward looked at six months of historical payment data
prior to residents’ enrollment in the program and compared it to six months of payment history
since the program began.
Resident Credit Profile Changes
The credit report is like a financial resume. It is a collection of behavioral indicators widely
recognized by the mainstream financial system (i.e. credit utilization rates, payment behavior,
etc.), which are used to track and predict behavior and influence access to safe and affordable
mainstream financial products. Credit scores, as aggregate measures of financial behavior, are
used to define the cost and access to credit and other services (loans, rental housing, utilities,
car insurance, etc.).
To measure changes in both credit report data and credit scores, Innovative Changes obtained
written authorization from residents, once prior to their rental payment being reported to
Experian by Home Forward, and once afterwards. Of the twenty-eight residents whose rental
payment data is currently being reported, Innovative Changes was able to pull reports for
eighteen as of this report. The changes are listed below:
Sixteen residents started with a credit score and saw an average 34 point increase
change in score. Of those:
9
The average score prior to rent reporting was 579, and the average score after rent
reporting was 613.
Twelve experienced an increase in score increase, with an average change of 57
points.
The percentage of residents with less than a 30% credit utilization ratio increased
from 25% to 31%.
Two residents initially had no credit score and then established credit, obtaining an
average score of 616.
The average past due amount among all eighteen residents decreased by $1,448.
Credit Seminar Knowledge and Behavioral Impact
Using its model for delivering high-quality seminars on a larger scale, residents were invited to
participate in four separate workshops delivered by Innovative Changes--to learn and share
experiences in order to build credit as well as community. A total of 75 Home Forward residents
participated in Innovative Changes’ four-part credit seminar series.
Each workshop was offered twice over the course August 2015 through February 2016. A
comparison below of the results from the pre- and post-seminar surveys shows the significant
changes to participants’ reported credit building knowledge, skills and likely actions moving
forward.
Pre- and Post-Seminar Survey Question
How often do/will I consider my credit when
making financial decisions?
How often do/will I take steps to build, repair or
protect my credit?
I have an action plan for dealing with items on my
credit report.
Pre-Seminar
Survey Results
0% often, very
often
0% often, very
often
31% mostly, a lot
Post-Seminar
Survey Results
100% often, very
often
100% often, very
often
83% mostly, a
lot
10
Implementation Lessons
Learned
This program set out to
identify best practices in
designing and implementing
a model that public housing
authorities can use to give
low-income residents the
opportunity to build their
credit histories and scores by
having their on-time rental
payments reported to the
credit bureaus, in addition to
receiving credit education. As
with any innovation, the
initiative encountered
successes and challenges.
Through this program, we
identified new areas of work
and exploration that we hope
will be pursued and will help
further transform rent
reporting into a more
efficient and effective credit
building opportunity for
renters living in public and
affordable housing. Below
are some of the lessons
learned:
IMPLEMENTATION TIPS FROM THE FIELD:
Connect credit building through rent reporting to
residents’ goals in order to increase participation.
For example, Home Forward made the case for
how credit building is key to GOALS participants’
success. As a result only one of the 67 residents
whom Home Forward reached out to about
participating in this project decided not to opt-in.
Institute cross-entity information sharing releases
in order to execute and share documents and
relevant information about participating
residents. To streamline the project enrollment
process, Home Forward staff worked with
residents to complete and transfer to Innovative
Changes the credit pull authorization forms
needed to access credit data.
Agree ahead of time on simple and clear protocols
for communicating seminar scheduling and other
relevant issues between agencies and with
residents. After a few early glitches, Home
Forward and Innovative Changes staff committed
to checking in with each other at least once prior
to each scheduled seminar and to follow up with
residents registered to participate about
attendance.
Ensure interpretation/translation is available as
necessary for residents who need it – especially
when dealing with complicated financial terms or
concepts. There are 19 different languages spoken
at Home Forward’s Stephens Creek Crossing
property, so interpretation/translation services are
needed to make the rent reporting for credit
building services accessible to all interested
residents.
Public housing authorities
implementing asset
building and financial
capability services–
including but not limited
to Family Self-Sufficiency,
JobsPlus, and Choice
Neighborhoods programs--are well suited to offering a rent reporting for credit building
initiative. Rent reporting is a tangible credit building strategy to enhance self-sufficiency
outcomes like increased savings, employment, homeownership and financial stability
generally. Helping residents establish and improve their credit profiles is critical to their
ability to achieve short-, medium- and long-term opportunities that accrue to those able to
join and productively participate in the financial mainstream.
11
Tangible and ongoing credit
improvements resulting from
rent reporting for credit
“I’m able to save and pay rent before it is due. I’m no
building offers a hook for
longer waiting until the last minute to pay bills –
residents to engage more
which has placed less stress on myself and my family.”
deeply with resident services
staff, external experts like
- Home Forward Resident
Innovative Changes staff, and
equally importantly, helped foster a larger sense of community. While both Home Forward
and Innovative Changes exhibited a clear commitment to supporting residents and to
collaborating closely on implementation, residents themselves came together to help each
other in different ways. This included encouraging neighbors they had never before spoken
with to participate and translating for each other when language was a barrier during
seminars specifically.
Credit education can be
delivered in both an impactful
“In addition to working on correcting my credit, I
and scalable manner that not
recently opened a bank account and secured a fullonly increases knowledge, but
time job.”
also fosters a sense of
-Home Forward Resident
possibility and hope that
empowers action. By accessing
credit reports ahead of the first seminar and bringing them for the respective residents to
review in class, Innovative Changes was able to maximize the efficiency of conducing a
group session while providing a relevant and personalized experience for residents.
Pairing a credit building product, such as rent reporting with credit education benefits all
parties. By connecting rent reporting participants with credit education experts at
Innovative Changes, Home Forward was able to better help their residents translate credit
improvements into other tangible outcomes.
Setting up to become a data furnisher of resident rental payment data can take time for
even the most committed landlord. Planning resident outreach and credit education
programming around the rollout of reporting should be coordinated and carefully
considered.
It is important to assess residents’ interest in participating in rent reporting for credit
building, and it is equally important to determine their readiness. Reviewing credit reports
and rent rolls as part of the enrollment process is helpful to determining whether there is –
and how best to deal with -- any outstanding payment issue(s) that the resident may want
to address with creditors or with landlords that the resident may not even know exists.
12
Program Sustainability
One of the benefits of credit reporting is that now that Home Forward has invested in the setup process and technology, the reporting continues indefinitely. With an ongoing investment in
credit education, in partnership with third-party experts like Innovative Changes, Home
Forward expects to not only sustain positive results, but continue to see increased benefit over
time. Because Home Forward already offers resident services like GOALS and other programs,
we expect that the rent reporting initiative will be embedded in its program design moving
forward, and will also be offered to other residents outside of the GOALS program, including,
eventually, those living in other properties.
Starting a Rent Reporting for Credit Building Program
Prior to this program’s implementation, CBA had identified the major steps necessary to
successfully implement a rent reporting for credit building initiative through its 2012-2014
Power of Rent Reporting pilot. The Home Forward program was informed by these factors and
shows how they can be applied in different contexts with varying approaches. Each public
housing authority is unique, a Rent Reporting for Credit Building initiative need not be
implemented exactly as presented below. For example, these steps may sometimes occur in a
slightly different sequence, and it is likely for two or more to take place at once. However, we
believe that each step is necessary to implement a successful rent reporting for credit building
initiative.
1. Determine how reporting will be done. Landlords may choose to report data directly to one
or a combination of the three major CRAs, or to contract with a third party data furnisher
that may or may not also require a commitment to online rental payment processing.5 If
direct rent reporting is selected, it is imperative that the landlord designate a point person
to manage the application, data testing and credentialing process with the CRAs.
2. Set up to have rental payments reported. Whether a landlord reports directly or engages a
third party to furnish the data, a set up period that includes entering into legal agreements
and technological systems configurations must take place. There are many factors that
contribute to how long this set up phase takes, especially when a landlord decides to report
directly, as there is no “one size fits all” scenario in these instances. On average, however, it
can take as little as three months to as long as twelve to get through this process.6
3. Resident outreach and education. How and to what extent residents will be engaged in an
organization’s rent reporting initiative depends on several factors, including resident
populations served, the objectives of the initiative, existing communication platforms, and
5
CBA offers a RRCB consulting service that includes helping non-profit owners and/or their third party operators to
assess the various options for reporting rental payment data. For more information about this service, please visit:
http://www.creditbuildersalliance.org/rent-reporting-credit-building-consulting.
6
For more information about setting up to report to the credit bureaus directly, please see CBA’s Rent Reporting
101 Guide by visiting http://www.creditbuildersalliance.org/whats-new/hot-topics/power-rent-reporting-pilot.
13
staff capacity. CBA recommends that, at a minimum, the decision to report rental payments
be disclosed to affected residents. Many affordable housing providers, particularly those
receiving HUD funding, are required to collect residents’ written consent in order to report
their personal identifying information to the credit bureaus. While the written consent
requirement creates additional work for staff, CBA encourages organizations to view this
opt-in requirement as an opportunity to engage residents in a positive conversation about
credit building and introduce them to other programs and services offered. As stated in the
program results and lessons learned sections above, CBA also believes that pairing rent
reporting with credit education is a best practice for maximizing the initial and sustaining
the longer-term benefit for residents.
4. Make credit building count. Building credit profiles do not happen overnight; they take time
and a commitment to engaging in consistent and responsible financial behaviors. Rent
reporting — like any credit building tool — offers individuals and families a valuable tool to
embark and get a head start on that journey. Affordable housing providers can help
residents sustain and leverage credit building momentum to achieve their financial and
other goals by tracking credit history and score establishment and changes over time,
engaging regularly with residents about their credit building progress and how it relates to
their goals, celebrating their successes to foster a sense of progress and accomplishment,
and helping them leverage their successes to reduce expenses, build assets, and achieve
financial stability.
Conclusion
CBA and CFED will continue to encourage rent reporting for credit building throughout the
public and affordable housing industry as a proven tool for helping residents build credit. In
addition to affordable housing providers that may report rental payments directly to the credit
bureaus, many community organizations working with low-income renters are looking for
strategies to motivate property managers to begin and sustain a rent reporting for credit
building initiative. While there is certainly an investment of staff time required, and there may
be some associated hard costs to get an initiative going, once set up, rent reporting for credit
building is one of the most cost-effective financial capability strategies out there–both for the
resident and for the landlord. In addition to looking for funding from foundations and other
philanthropic sources, public housing authorities may include investments in this type of
program as allowable expenses through HUD grants for Family Self-Sufficiency and JobsPlus
funding.
All of the parties involved in this program are extremely encouraged by its results, due in major
part to effective collaboration between the participating organizations and the incredible
receptivity to it among residents themselves. We are confident that, as rent reporting gains
traction and more public housing authorities implement and evaluate rent reporting for credit
building initiatives, their results will bolster and expand on the outcomes of this initiative.
14
Appendix 1: Rent reporting impact analyses known to
CBA as of the date of this report
“The Power of Rent Reporting Pilot: A Credit Building Strategy”, Credit Builders Alliance.
2015. Found here: http://www.creditbuildersalliance.org/whats-new/hot-topics/powerrent-reporting-pilot.
Summary of analysis:
Rent reporting is seen by renters as a good opportunity for credit building.
Ninety-seven percent of residents who responded to a survey on the pilot
said paying rent on time is a good way for them to build their credit.
Rent reporting offers a significant credit building opportunity to residents
living in affordable housing. After isolating the impact of including rental
payment history on participants’ credit reports, CBA found:
All residents participating in the pilot who initially had no credit
score5 had either a high nonprime or prime score with the inclusion
of their rental payment history.
A large majority (79 percent) of participants experienced an increase
in credit score, with an average increase of 23 points.
A small number of pilot participants (14 percent) experienced no
change in their credit score after including the rental trade line, and
an even smaller number (7 percent) experienced a decrease in credit
score.
Rent reporting is a promising strategy for affordable housing providers
seeking to increase resident participation and success in financial coaching
and asset building programs. Pilot groups consistently reported the
integration of rent reporting outreach and education into existing financial
coaching and asset building programs as an efficient and effective strategy
for engaging residents in credit building and helping them translate credit
improvements into progress toward other financial goals.
Rent reporting in combination with financial coaching can incentivize
residents to increase their rates of paying rent on time. Among residents of
one pilot group with a history of regularly paying late, those who agreed to
have their rent payments reported and to participate in financial coaching
were more likely than other residents to substantially increase their rate of
on-time payment.
“Credit for Renting: The impact of positive rent reporting on subsidized housing
residents”, Experian RentBureau. 2013. Found here:
http://www.experian.com/assets/rentbureau/white-papers/experian-rentbureau-creditfor-rent-analysis.pdf.
Summary of analysis: In Credit for renting: the impact of positive rent reporting
on subsidized housing residents, Experian® RentBureau® analyzes data from a
1
subset of the larger Experian RentBureau database comprising rental payment
history on more than 12 million residents nationwide. As a result of adding the
positive rental tradeline:
No-hit (unscoreable) residents (comprising 11% of the resident subset) are
now considered thin file and scoreable using VantageScore 3.0. These
individuals now are able to leverage the existence of a credit file to continue
to build credit history.
An additional 9 percent of the study population now is considered thick file,
potentially resulting in increased access to credit at better terms.
Residents in the study considered subprime prior to the analysis particularly
benefited from the addition of the rental tradelines, as evidenced by a 19
percent decrease in this group. These individuals migrated from subprime to
at least one higher (less-risky) risk segment (nonprime or prime).
In addition, the segment of the population in the nonprime category nearly
doubled from 12 percent to 23 percent, and
The allocation in the prime category increased by 24 percent, from 17
percent to 21 percent.
TransUnion Analysis Finds Reporting of Rental Payments Could Benefit Renters in Just
One Month, Transunion. 2014. Found here:
http://newsroom.transunion.com/transunion-analysis-finds-reporting-of-rentalpayments-could-benefit-renters-in-just-one-month.
Summary of analysis: The analysis found that approximately eight in
10 subprime consumers (79.1% of those with a VantageScore® 2.0 credit score
lower than 641 on a scale from 501 to 990) experienced an increase in their
score one month into their new apartment lease. Nearly 41% of subprime
consumers saw their VantageScore increase by 10 points or more after one
month.
RentTrack Completes Six-Month Review of the Impact of Rent Reporting ,
RentTrack. 2015. Found here: http://www.renttrack.com/blog/renttracksix-month-review-rent-reporting-impact/.
Summary of analysis:
Residents who reported rent went up an average of 9 points on the tribureau Vantage Score.
For subprime consumers, or those with credit scores below 650, the average
point increase was 29 points.
100% of residents without a score became score-able, with an average
starting Vantage Score of 639.
Presentation at Oregon Opportunity Network Conference, Portland Community
Reinvestment Initiatives. 2015.
Summary of Results:
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Currently has 47 residents who are using RentTrack whose feedback on the
process includes:
Universally the system was found to be easy; residents especially liked
the online payments which came with an email reminder and an email
receipt every month.
Many residents said RentTrack was their first use of autopay
All had faith that their credit score was going up, but not all of them had
checked. RentTrack has a service where for a monthly fee residents can
have their Vantage score.
PCRI’s residents had their average VantageScore 3.0 score increase 32
points.
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