Experian has announced it is now incorporating positive rental data from its RentBureau Division into the traditional credit file, opening a new avenue for the estimated 50 million underbanked consumers—which can include everyone from college students and recent graduates to immigrants—to build credit with continuous on-time rental payments.
"Given that one-third of the U.S. population rents, we felt it was imperative to reflect the true creditworthiness of those individuals who responsibly pay their rent," said Brannan Johnston, vice president and managing director, Experian RentBureau. "Our research shows that over one in three consumers in the highest risk VantageScore score band will improve to at least the next score band with the addition of positive rental data from RentBureau. We are thrilled to be industry leaders in this initiative, and look forward to providing this credit-building avenue to residents."
According to the National Multi Housing Council, there are nearly 96 million individuals currently renting who are not getting the "credit" they deserve based on their credit reports. In the past, on-time rental payments did nothing to boost a credit score. Positive rental history will now help many renters who are looking for ways to rebuild their credit scores due to financial hardships such as a foreclosure or a bankruptcy. In the past, only a subset of negative rental activity was reported. Moving forward, continuous rental payments can be leveraged by consumers to qualify not only for new leases, but also for other financial products.
There is also a benefit to lenders with the addition of rental payment data. Lenders can now update their underwriting procedures to automatically capture a consumer's rental payment obligations from the credit report and eliminate the need for costly, time consuming manual entry. Additionally, lenders will now have a comprehensive understanding of a consumer's total monthly obligations to assist with offering credit to emerging consumers.
"For more than 20 years Experian has been a strong supporter of comprehensive data reporting for the benefit of lenders and consumers," said Steven Wagner, president of Experian Consumer Information Services. "Including rental payment data in the credit file is a groundbreaking win for consumers and our vision of full-file reporting. Many consumers feel that building credit is an uphill battle, but this approach gives renters credit for managing the payments for the place they call home."
Experian acquired RentBureau's multifamily division in June 2010. RentBureau is the largest and most widely used credit bureau for the multifamily industry. RentBureau's database receives rental payment histories every 24 hours from its national network of property management companies, which currently includes more than eight million residents nationwide. Members of this network contribute their rental data to RentBureau directly and automatically from their property management software. In return, members receive immediate, centrally stored, integrated verification of new rental applicants' payment history as part of their existing resident screening services.
For more information, visit www.experian.com.
