This program helps people increase their credit score simply by using the


When renters make late payments, their landlord can levy a penalty and report that late payment to the credit bureaus, affecting their credit score. And unlike mortgage payments, paying rent on time doesn’t automatically build credit. For low-income Americans only half of whom have access to a credit card and who are more likely to rent than own – meaning building credit can be a hurdle.

But in recent months, residents living in certain affordable housing units across the country have been able to improve their credit scores by paying their rent on time. The initiative is a partnership between Kairos Investment Management Company, a private equity firm focused on real estate investments, and Esusu, a fintech company developing tools to allow tenants to report their payments to the big three credit bureaus.

Kairos offered the loan building tool to 19 of its affordable community communities, which have about 4,000 units in seven states, including Florida, Texas and Oregon. It allows landlords to report timely payments to credit bureaus instead of just reporting late ones. Esusu worked with Freddie Mac to help cover some of landlord registration costs. (The registration cost for landlords can vary; for some it’s $2 a month, for others $50 per year; Freddie Mac helped cover some expenses other also partnerships.) If a tenant is late with a payment, Esusu will sign them off instead of sending that information to credit bureaus; According to Kairos, before the pandemic, 99% of rent was collected regularly on a monthly basis; It has fallen to 97% during the pandemic but is expected to improve.

“By positively reporting rent payments on tenant loans to build credit, while landlords typically only report when there’s a negative result, it’s an interesting way to approach the problem,” said Jonathan Needell, president and chief investment officer at Kairos.

Esusu also tracks credit improvement. In his first report for Kairos, Needell says that 46% of residents who signed up for the rent reporting program improved their credit score by at least one point. The highest improvement was 168 points. There is only one report covering one month of the program, so there are other partnerships with Esusu, although the data is relatively sparse have found that the credit scores of the majority of residents who participate in a rent reporting program have increased by an average of 32 points, and that these programs have helped thousands of renters with no credit history determine their “financial identity.” For people with bad credit – which often means paying more fees borrow money and higher Insurance premiums – low scores often mean they remain in a cycle of poverty even as they start earning higher wages.

Tenants have found themselves in a particularly precarious financial situation of late, amid pandemic job losses, the end of pandemic-era rent relief programs and eviction protection programs, and with rents soaring all-time highs across the country. away September 2021, around 10.7 million tenants were left behind with their rent. But financial struggles among renters existed before the pandemic, when renters’ credit scores were between 87 and 106 points lower than homeowners.

Esusu also offers a rent relief initiative, where renters can apply for interest-free loans to cover rental costs for up to two months. So far, Esusu has lent about $7,000, or six tenants of Kairos, in the first two months the opportunity was offered. The average term of this loan was only four weeks. “When people are behind, they are just a little behind,” Needell said. Many people in affordable or regulated housing are service workers in hourly jobs. So if they miss work because of illness, “they have a week less pay and just have to catch up. Therefore, it is not surprising that a small loan can help them a lot.”

Kairos also offers other social programs, such as free flu shots, a free summer lunch program for children, and free tax-preparation services. Kairos has also run programs with non-profit organizations to provide backpacks and school supplies around the back-to-school season. Needell acknowledges that these benefits ultimately help the management company as well — tenants might have trouble paying rent early in the school year because they prioritize getting necessities for their kids — but they can also help ease the financial burden of tenants to decrease.

The loan building program with Esusu could help these tenants even if they no longer live in those units. “These are people who, when they go to their next unit in their next property, can benefit from having better credit and getting into a better property. They could also get a better credit card rate because their credit rating is higher. They might actually qualify for a first home mortgage faster because they have better credit,” says Needell. Low-income renters are also typically required to post utility deposits, but depending on the area and business, this may be waived if someone has good credit. “A better credit rating has many advantages.” This program helps people increase their credit score simply by using the


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