Rent Reporting for Credit Building NeighborWorks Demonstration Project

Transcription

1 W Rent Reporting for Credit Building NeighborWorks Demonstration Project Seattle, Feb. 23, Credit Builders Alliance, Inc. Some rights reserved. CREDIT BUILDERS ALLIANCE and the accompanying Logo are trademarks of Credit Builders Alliance, Inc. This document is licensed under a Creative Commons Attribution-Noncommercial-Share Alike License (US/v.3.0). Noncommercial uses are permitted on the condition that you include an attribution to Credit Builders Alliance. If you alter, transform, or build upon this work, you may distribute the resulting work only under the same or similar license to this one. More information regarding the license is at: Requests for permissions beyond the scope of the license should be directed to Credit Builders Alliance, Inc., at Credit Builders Alliance ("CBA"), a not-for-profit organization, makes this information available for informational purposes only. This information is not intended as legal, financial, other advice, and you and your clients should consult qualified info@creditbuildersalliance.org advisors before making any decisions. CBA does not represent 2016 Credit that Builders any of the Alliance, information Inc. Some will rights produce reserved. results.

2 Credit Builders Alliance

3 Context Going A Good Product Key Tools CREDIT HISTORY/FILE: Record of transactions CREDIT REPORT: Record of a credit history If you have no credit history you will NOT have a credit report or credit score You can have a credit history and report but NO credit score CREDIT SCORE: Number summarizing credit risk at a particular point in time

4 Context What is a good score? Note: Based on FICO Score ranges and distributions. There is no one score and ranges are not static, what is depend on the lender/business as well as overall consumer performance at any given time.

5 Why Credit Building? Two Tiered Credit System Less than half of Americans have what is considered to be a prime credit score (CFED) 45% of consumers in low-income neighborhoods are credit invisible or unscoreable Black and Hispanic consumers are 2 times more likely to have limited credit records (CFPB)

6 Why Credit Building? Passport to the New Economy Increases Access, Affordability, and Options for Financial products Rental Housing Utilities Cell phone plans Insurance products Employment Asset Building

7 What is Credit Building? Three Elements Establishing and maintaining ACTIVE (paying on time & regularly) trade lines that are reported by creditors to the major credit bureaus. STRONG CREDIT HISTORY

8 What is Credit Building? Catch 22 Opening and successfully managing financial products is key to building and maintaining a good credit history.

9 Rent Reporting for Credit Building Financial Capability in Action Report rental trade line to major credit bureaus Provide upfront credit education & ongoing skills building + = Established/improved credit scores leveraged to achieve goals.

10 CBA s Power of Rent Reporting Pilot funded by the Citi Foundation 8

11 Power of Rent Reporting Pilot Results Pilot participant survey results: 97% reported that paying rent on time is a good way to build credit Credit score analysis results: 100% who were initially unscorable became SCOREABLE (avg. 676) 79% increased their credit score by an average of 23 points 90% starting as subprime saw an average increase of 32 points 7% increase in nonprime tier; 3% increase in prime tier Credit score analysis results: 25% increase in on-time payments experienced by one CDC

12 NW Boston Demonstration Project Results Credit score analysis results: 100% who were initially unscorable became SCOREABLE (avg. 688) 79% (avg. 617) increased their credit score by an average of 28 points 47% starting as subprime (avg. 531) saw an average increase of 39 points Credit score analysis results: 0% paying late

13 Benefits of Rent Reporting Residents Build credit without assuming addition debt No need to do anything but enroll Resident Service Providers Tangible product to move credit history/score needle Hook for education/coaching and other financial capability & asset building programs Property Managers Positive incentive for timely rent payments Competitive advantage in recruiting new residents.

14 How Rent Reporting Works Rental payment information can be reported to one or more of the major credit bureaus by A Property Manager Or A Third Party Payment Processor

15 RRCB Process Overview Organizational Commitment Assess Reporting Options Outreach, Education & Outcome Tracking Plans Application & Credentialing (Direct) / Back-end Coordination (3P) Program Implementation

16 Characteristics of Successful RRCB Initiatives Organizational buy-in at all levels and understanding of mission and business alignment Capable and responsive property/asset management team and software/it contact(s) Resident services capacity to coach/educate and motivate residents about credit building and linkage to financial goals

17 Rent Reporting for Credit Building Home Forward Case Study ding_at_home_forward

18 Thank You! Thank you for joining us! Learn more at Please be in touch Sarah Chenven