Why Hasn't Rent Reporting Taken Off?
Editor’s note: This is the third of a series of blog posts published by Prosperity Now’s Affordable Homeownership 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. Previously, we discussed why rent reporting is a pathway to good credit, what it takes to implement it and how financial capability can amplify its effects. This post was provided by Esusu Financial, Inc and Credit Builders Alliance.
Have questions or additional commentary on rent reporting? 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.
In my time at Credit Builders Alliance (CBA), I have yet to encounter someone who flat out rejects the concept of rent reporting. “That makes so much sense!” most people say. “Why isn’t this already the norm?!” others exclaim. There is clear data that rent reporting can help residents build credit and a lot of enthusiasm around rent reporting, but why isn’t it catching on as fast as ”flossing” at a middle school party?
There are many reasons for the slow adoption of rent reporting. Many housing providers still don’t know about rent reporting and its potential benefits. Even if they’ve heard of it, housing providers are often already overworked or feel that obtaining buy-in and resources to implement is too big of a lift. But just as older people have a harder time flossing than those young folk, it’s not impossible for them to make room for it in their lives. Sometimes it just takes an outside eye to deconstruct and streamline the steps.
To make it easier for housing providers to say “yes” to rent reporting, CBA went back to the drawing board to brainstorm a new model for rent reporting. We identified the pain points related to implementation that we’ve heard consistently from housing providers over the past five years. They boiled down to three priorities:
- Simplify the setup process. There are many ways housing providers can report rental payments to the credit bureaus, but the steps for setting up each option are often murky and cumbersome. CBA has seen many housing providers get stuck in configuration limbo, never getting to implementation. Some of this is due to technology that doesn’t communicate with other systems, lack of a responsive point person on the software or bureau side, or merely losing momentum when there is too much time in between one step and the next.
- Reduce burden on staff and most importantly, residents. We are all busy. Adding new multistep processes to our daily tasks—be it paying monthly rent using a new platform, signing more paperwork or producing additional rent ledgers—can impede uptake. Figuring out ways to embed rent reporting into existing structures is key.
- Amplify outcomes. Rent reporting is worth it because of the large impact it can have on residents. Yet, it’s been unwieldy and costly for housing providers to incrementally pull credit reports and track score change and other outcomes over time.
With these priorities in mind, CBA teamed up with a trusted fintech partner, Esusu Financial, Inc. Esusu provides a rotational savings platform through a mobile app and was already collaborating with many CBA members when we met their staff. It immediately understood the challenges we were hoping to solve and had ideas for solutions. We worked with them and a group of pilot housing providers to develop a new platform—CBA-Esusu Rent Reporter—that we hope will make rent reporting more accessible for affordable and public housing providers no matter their shape, size, location or organizational structure.
Our platform makes it easy for housing providers to design and implement a rent reporting program. Here is how we are addressing the priorities listed above:
- Simplify the setup process. Our platform requires no complicated technical configuration, and the setup process is fairly straightforward. Basically, housing providers need the capacity to collect some basic data on tenants and their rental payments, and they can transmit that data to our platform in a simple Excel format!
- Reduce burden on staff and most importantly, residents. The only thing residents do is opt-in (in writing) to rent reporting. Other than that, nothing changes on their end. For staff, CBA has created a toolkit of messaging and outreach resources and templates that they can use to hit the ground running with implementation.
- Amplify outcomes. Each provider has access to an online dashboard of aggregate credit score outcomes so they can pull data on program impact at any time.
Like any new dance move, we are currently testing this out, making tweaks as needed and will be inviting others to dance with us over the next couple months (and years!). While this model was built in response to what we saw and heard in the field, the field is always changing. As the rent reporting landscape grows and evolves, we will rely on our partner affordable housing providers’ input so we can offer course corrections along the way. We encourage you to join us in these efforts. Together, we can make it a given that tenants of affordable and public housing have the option to enroll in rent reporting wherever they live, and dance if they want to!