Fannie Mae has rolled out its Multifamily Positive Rent Payment Reporting program to help renters build credit history and improve their scores, a company press release said.
It will start as of Sept. 27, and will let eligible multifamily property owners share rent payment data on a vendor network, to go to the three major credit bureaus to incorporate into renters’ credit profiles.
The idea is to help add more access to credit, cutting out “unnecessary obstacles” in a consumer’s process of finding housing.
On-time rent payments aren’t always included in credit reports – so they don’t always contribute to a credit score, which puts many renters at a disadvantage. The new Fannie Mae program will help speed up the adoption of rent payment reporting.
Multifamily borrowers who adopt Positive Rent Payment Reporting will be able to help renters who pay on time and it will help underserved groups, according to Michele Evans, Executive Vice President and Head of Multifamily with Fannie Mae.
“Around 20% of the U.S. population has little to no established credit history, a group in which Black and Latino/Hispanic people are disproportionately represented. Of the consumers who do have a credit score, a disproportionate number of Black consumers have a subprime credit score. These imbalances reinforce racial disparities in access to credit and quality affordable housing among renters and homeowners,” she said.
Fannie Mae has also recently decided to consider rent payment history when determining creditworthiness of those looking to finance homes, PYMNTS wrote.
Read more: Fannie Mae Will Consider Rental Payment History for Mortgage Applications
The 12 most recent rental payments will be assessed when lenders use automated creditworthiness check systems, with permission to look at records having to be given by the applicants. Landlords don’t report rent payments to credit reporting bureaus, which has had the effect of shutting people out.
“For many households, rent is the single largest monthly expense. There is absolutely no reason timely payment of monthly housing expenses shouldn’t be included in underwriting calculations,” Sandra L. Thompson, acting director of the Federal Housing Finance Agency, which regulates Fannie Mae, said in a statement.