According to a USA Today story, Fannie Mae has a new strategy to assist landlords in paying for rent reporting to credit agencies in order to assist tenants in raising their credit scores.
GlobeSt.com requested a comment from Fannie Mae but did not hear back.
Fannie Mae will collaborate with Esusu Financial Inc., Jetty Credit, and Rent Dynamics, three New York-based third-party services that Fannie Mae will work with to offer information for landlords and property management firms.
Rental payment data, which can impact credit scores, is accepted by the major credit reporting companies. When made on time, timely payments can raise them, whereas late rents can have the opposite impact. Many operators and landlords have already reported late payments, according to Credit.com. While timely payments are “growing more common to be reported,” smaller property owners are still less likely to do so. Reports can be generated by third-party providers, but they do so at a cost.
According to Michele Evans, executive vice president and director of multifamily at Fannie Mae, “We’re attempting to be a catalyst to speed this adoption given the reach that we have across the country.” “We’re rewarding borrowers [landlords] so it benefits historically underserved communities that just have disproportionately low credit ratings,” the statement reads.
Tenants who pay their rent on time may see their credit score rise, which may be helpful in the future when applying for items like a mortgage.
According to a report from the Consumer Finance Protection Bureau in 2015, “26 million Americans are “credit invisible,” which means they have no history with any of the three main credit reporting companies. 19 million more people are classified as “unscored,” meaning they don’t have enough recent credit history to receive a score from a rating agency.
Esusu states that utilizing their system, “the average resident’s credit score grew by +51 points in 18 months” and that “[reporting] rent payments to major credit agencies helps renters boost their credit ratings, all while helping owners and property managers maximize returns.”
In their marketing materials, Esusu, Jetty, and Rent Dynamics all state that they assist landlords in developing ESG efforts by collaborating with tenants (the “S” stands for social).
