Credit Builders Alliance (CBA), where I am the CEO, has been actively involved in rent reporting as a credit building strategy since 2012. During that time, CBA has led over 50 affordable housing providers through the implementation of rent reporting programs at their respective agencies. Our Rent Reporting Team is currently leading 12 additional housing providers through implementation as well.
In addition to providing affordable housing, many of these housing agencies have chosen to pursue rent reporting specifically because it can open doors for individuals who face barriers to credit building (or re-building) — for example, survivors of domestic violence, veterans, young people transitioning from foster care and homelessness and returning citizens, to name a few. Rent reporting is an accessible and safe way for these individuals and others to build credit without accumulating additional debt: If a participating landlord pays for the service, there is no additional cost to renters, and thus far, all 50 housing providers have chosen to pay this cost at the start of their program.
The majority of the providers our team has worked with have chosen to offer their rent reporting program as an opt-in program. Most of them are not only doing this to follow HUD’s legal guidance that they must do opt-in in order to comply with the Federal Privacy Act of 1974, but also because they strongly believe in giving their residents the choice to participate.
In addition, because the majority of the providers report rental payment data through working with third-party service providers, their residents only have positive data reported. Also, renters who participate in rent reporting through these providers can opt out of rent reporting at any time — whether they chose to opt-in in the first place, or if their provider opted them in automatically through the opt-out approach.
At CBA, we believe that rent reporting is just one step renters can take to start building their credit and should be paired with financial wellness programming for maximum impact. Based on our research and experience with rent reporting, as well as our 15 years of serving as a bridge between nonprofit lenders, financial educators, and asset builders and the major credit reporting agencies, we can confidently say that there is a specific group of renters that will more than likely benefit from rent reporting: those who pay rent on time and have thin credit files or no credit.
Rent reporting is a strategy that can help residents build credit to reach their individual financial goals and dreams. For some the dream is homeownership. As an example, six of the renters who participated in the D.C. Housing Authority rent reporting pilot have become homeowners since their program started in 2020. Additionally, building strong credit opens doors for safer and more affordable credit cards and auto loans. It can equate to lower deposits on future rental housing, utilities, or cell phone plans. Strong credit can help secure a small business loan, safe banking products, and more affordable insurance products.
CBA has seen firsthand the increased financial empowerment, self-efficacy, and self-confidence resulting from an action that low-income tenants were already taking (paying their rent).
Dara Duguay is the CEO of the Credit Builders Alliance. Prior to joining CBA, she was the director of Citigroup’s Office of Financial Education and founding executive director of the Jump$tart Coalition for Personal Financial Literacy.
Editor’s note: This piece was updated on March 6 to correct a job title and correct the number of renters who became homeowners through a rent pilot program.