WASHINGTON–Fannie Mae has introduced a “Multifamily Positive Rent Payment Reporting Program” it said is aimed at helping renters build credit history and improve their scores.
The program will allow eligible multifamily property owners share rent payment data on a vendor network that to go to the three major credit bureaus to incorporate into renters’ credit profiles.
The idea is to help add more access to credit, cutting out “unnecessary obstacles” in a consumer’s process of finding housing, according to Fannie Mae.
“On-time rent payments aren’t always included in credit reports – so they don’t always contribute to a credit score, which puts many renters at a disadvantage,” Fannie Mae said. “The new Fannie Mae program will help speed up the adoption of rent payment reporting.”
According to Michele Evans, EVP and head of Multifamily with Fannie Mae, multifamily borrowers who adopt Positive Rent Payment Reporting will be able to help renters who pay on time and it will help underserved groups.
‘Little to No History’
"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 Evans. “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.”
The 12 most recent rental payments will be assessed when lenders use automated creditworthiness check systems, with permission to look at records having to be given by the applicants. Landlords don’t report rent payments to credit reporting bureaus, which has had the effect of “shutting people out,” according to Fannie Mae.