3 Housing Authorities to Implement Rent Reporting as a Credit-Building Tool for Residents
It is increasingly important to have good credit if you want access to financial products or services. Bad credit negatively affects your monthly bills, the utilities and services you are eligible to receive, what kind of car you drive and how much you pay for it, your job prospects and, most importantly, where you can buy a home and its cost. Having poor or no credit could mean a higher mortgage payment. Worse, your housing application could be turned down. Landlords also use credit scores to decide whether to rent to potential tenants.
Despite the importance of credit, many people still don’t realize how much it matters. This lack of knowledge leads them to make financial decisions that adversely affect their credit. Many Americans are also trapped in a cycle of poverty—a major obstacle to improving credit scores. This denies people who cannot afford to buy a home and make on time mortgage payments (which are factored into credit scores) but pay monthly rent on time the ability to build good credit because rent is usually not reported to credit bureaus.
A promising solution to this is rent reporting: the monthly reporting of tenant rent payments to at least one of the major consumer credit bureaus for inclusion on consumer credit reports. This gives individuals with poor or no credit an opportunity to build up their credit without taking on additional debt, applying for a new product or making another monthly payment.
At Prosperity Now, the Affordable Homeownership Team has partnered with the Credit Builders Alliance (CBA) to implement rent reporting programs with three housing authorities—Housing Authority of Clackamas County, Home Forward and Northwestern Oregon Housing Authority, in the Portland, Oregon area. While CBA works with organizations to develop and launch rent reporting programs, Prosperity Now advises those organizations on how they can integrate financial capability programs that help residents build credit and achieve other financial goals.
After a year of setting up and implementing this rent reporting program, we hope to see greater financial security among residents. When rent reporting is successful, it can open new opportunities that were previously out of reach. Take a look at what residents in Stephen's Creek Crossing, a Home Forward property, had to say about participating in rent reporting:
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