Making Rent Count


Unaffordability in our city is mounting — and our credit crisis only exacerbates it. Our new report shows wide disparities about who has access to credit – and who doesn’t. That’s why New York City Comptroller Scott M. Stringer has a first-of-its-kind solution: let’s give renters the ability to add rent payments to their credit histories, just like homeowners do for mortgage payments.

We need to make rent count.

Why Credit Matters

New York City faces an affordability crisis, and this proposal seeks to help mitigate it. Credit scores — which are used to measure the likelihood an individual will pay back a debt — collect data from consumers to determine whether they have made timely payments on credit cards, mortgages, and auto loans. Currently, however, most credit scores fail to capture an individual’s positive rental history and instead are can be used by landlords to only report late payments by tenants.

From housing to finance, an individual’s credit score can be the deciding factor between being denied a loan or securing a good rate, or having a rental application rejected or put at the top of the pile. In short, a low credit score translates into worse loan terms, pricier credit cards and insurance policies, and higher utility payments.

Leveling the Playing Field

This first-of-its-kind report uses proprietary data from one of the three major credit bureaus. It finds a real connection in New York City between low credit scores and factors like race, income level, and home ownership rates. The Comptroller’s Office studied a representative sample of city tenants paying rents under $2,000, and in communities where the average credit score is below 630:

  • More than 78 percent of New York City residents rent their homes, compared to just 54 percent in neighborhoods where the average credit score is above 700 rent.
  • Black and Hispanic New Yorkers account for more than 90 percent of the population.
  • NYCHA residents comprise one in ten residents.

The bottom line is this: a New Yorker in a community with lower credit is more likely to be a renter, a person of color, and someone with a lower income.

We need to level the playing field.

Source: Experian

Making Rent Count

The report proposes a commonsense solution to these disparities. If given the opportunity to factor their rent payments into their credit scores, renters would benefit dramatically.

In fact, it could up to 28 percent of renters with a credit score for the first time. The average new score for these mostly low-income renters – now categorized as “invisible” or “unscorable” because of the relative lack of financial information in their credit files — would be a “prime” score of 700.

Research conducted by the Comptroller’s Office also concluded that 76 percent of participating NYC renters would see their credit scores rise significantly if rent payments – the biggest monthly check most New Yorkers write – were factored into their credit rating. As a result, Comptroller Stringer proposed that NYC become the first major metropolis in the United States to make empowering tenants to incorporate rent payments into their credit histories a priority.

The data shows that making rent would raise scores for 76 percent of New York City renters who currently hold a credit score. Specifically:

  • More than half (57%) would see their score rise between 1 and 10 points;
  • Nearly one in five (19%) would have their score boosted by 11 points or more;
  • 18 percent would see no change at all;
  • Just 6 percent would see a decline in their scores.

NYC residents who opt into the voluntary program would gain lower interest rates for loans and insurance. They would also be eligible for entirely new investment vehicles and loans that are reserved exclusively for individuals with higher credit ratings.

Making It Reality

The Comptroller’s Office is launching conversations with a wide range of stakeholders – tenants, banks, building owners, and more – to consider how to make this a reality and determine how to make New York City the first in the nation to get it done.

A number of policy changes that would make it easier for New Yorkers to report their history of paying rent in-full and on-time to credit bureaus include:

  • Helping landlords and property managers provide opt-in programs that give tenants the option to let their landlord report rent payment information to credit bureaus. The City should explore policies to incentivize these programs.
  • Urging banks and credit unions to leverage innovative strategies to identify rent payments and report them to credit bureaus. Suggestions include:
    • Serving as an intermediary where the bank or credit union collects rent checks, verifies them against a lease, reports them to a credit bureau, and then sends the payment to the landlord  for those New Yorkers who opt in;

Comptroller Stringer is also urging the City to take a number of steps, including:

  • Allowing all NYCHA residents to opt in to a credit reporting program. That could be done by expanding an existing pilot partnership NYCHA has with the Brooklyn Cooperative Federal Credit Union and Urban Upbound Federal Credit Union, which allows tenants to opt-in to report their rent payments to credit bureaus. That program could be scaled to the entire housing system.
  • Exploring incorporating rent into its affordable housing programs by incentivizing and informing developers of affordable housing about ways to develop a rent-reporting program.
  • Proactively using its Department of Consumer Affairs to develop credit building curriculums which assist renters considering opting into a rent reporting program.
  • Implementing a number of credit related consumer protections, including adjusting credit scoring models so that credit checks undertaken by landlords on prospective tenants will not negatively impact credit scores.
  • Passing legislation to require landlords who run credit checks on prospective tenants to share credit reports with the applicant and increase consumer credit education initiatives offered by the City.

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