What It Takes to Implement a Rent Reporting Program
EDITOR’S NOTE: This is the second post in a series of blog posts published by Prosperity Now’s Affordable Housing team about 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 post was provided by Housing Authority of Clackamas County. Today’s post addresses some of the challenges of implementing a rent reporting program.
Be sure to join us on April 2, 2019 at 2 pm ET for a webinar on rent reporting featuring Credit Builders Alliance, AHC Greater Baltimore and more! Register today.
“I know it’s a ridiculous amount to pay for a dryer every month, but you don’t understand, I really needed a dryer now. I can’t really handle the needs my son has without it. And they delivered it and installed it the same day.”
Angela was a very stressed, single mom with a severely disabled child. When her dryer broke down, she went to her local rent-to-own furniture store to get a new one that would cost a fifth of her monthly TANF check and take a year to pay off. A survivor of domestic violence, Angela’s abusive ex refused to make payments he had accumulated for a credit card they used together. As a result, Angela’s credit score was very low and she was unable to access affordable credit that would have allowed her to buy a dryer and make reasonable monthly payments. Instead of all the other necessities that Angela might have spent on—rent, food and clothing—these resources were poured into one very expensive dryer.
As a resident support service coordinator working in public housing communities in Clackamas County, Oregon, I had seen this scenario play out over and over. And not just with rent-to-own furniture, but with the range of other very expensive financial services available to poor people: auto loans with 29 percent interest rates, payday lenders whose clients pay 400 percent APR on loans, tax preparation services that charged one resident I knew (also a single mom who supported her two children working full-time at Taco Bell) $500 to prepare her taxes. It is absurdly expensive to be poor.
Because of stories like these, I have been very excited to oversee our work to implement a system where we help residents build credit by reporting their on-time rent payments to the major credit bureaus. This active positive trade line will help unscored residents establish credit and help those who need to repair their credit take the first step. Having a higher credit score can significantly reduce expenses for people who really need it the most.
Like all great ideas, there have been a range of challenges and details that we have needed to work though.
First, as a mid-sized housing authority with limited resident support staffing, we need to be creative and collaborate in new ways to implement the program. The training and support we received from the Credit Building Alliance and Prosperity Now helped us figure out what worked for other agencies across the county, what reporting systems are available and how those systems could be incorporated into our own. It has also been helpful to find a local community partner—Metropolitan Family Services—with expertise in financial education and coaching. As a certified financial planner, Alex helped us streamline our enrollment process, cross-train staff in reading credit reports and modeled how to talk to people about credit and credit repair.
Not being experts in the field, one of our primary concerns with this project was not to cause harm to any resident opting-in to the program. As people’s financial situations are complex, this remains a challenge. We continue to work on how to best educate residents about credit, give accurate information about building credit and connecting our residents to resources and good referrals for additional help.
Another major issue was how to track outcomes and measure the impact of rent reporting on credit scores. Initially, we thought we could pull credit scores ourselves, but we soon discovered we could only do “hard pulls” that would show up as an inquiry and would have harmed their credit. Instead, we decided to show residents how to access their credit reports and credit scores as part of our enrollment process. We would then use that information, which is freely available, to track program outcomes.
As of today, we have 10 people enrolled in rent reporting. These newly enrolled residents view it as a positive, optimistic step toward feeling empowered and hopeful about the future of their financial lives. We look forward to having positive results at the end of our engagement with Prosperity Now.
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