“Far too many renters do not see their on-time rent payments reflected in their credit reports, limiting their ability to build credit over time,” said Corey Aber, vice president of Multifamily mission, policy & strategy for Freddie Mac.
Building visible credit
Monthly housing payments are typically the largest monthly expense households face, but unlike homeowners that pay a mortgage, renters do not see a benefit in their credit files even when they pay rent on time, month after month and year after year.
To help renters build their credit and boost credit scores, last year Freddie Mac launched a program to encourage operators of Freddie Mac-financed multifamily properties to report on-time rental payments to the three major credit bureaus.
Since Freddie Mac began this initiative last year, more than 98,000 households across 948 multifamily properties have enrolled. More than 19,300 new credit scores have been established and almost 70% of renters with an existing credit score saw their scores increase.
“Ensuring that on-time rents are reported to the credit bureaus has been a long-term challenge—it hasn’t been an industry standard,” noted Aber. “Freddie Mac has found a creative solution that can facilitate reporting at a low cost that isn’t passed on to renters.”