“While a credit history is a key component in assessing a borrower’s ability to make a mortgage payment, building credit in the United States is not a fair business,” said Hugh Frater, Principal General of Fannie Mae, in a blog post.
The rent must therefore count for something. But according to FICO, which uses credit report data to build scoring systems that are already part of the mortgage underwriting process, only 0.3% of the roughly 80 million adults who live in rental housing have a mention of. rent on their credit records.
How can this be? I wanted to talk to the three dominant bureaus – Equifax, Experian, and TransUnion – about tenants. Equifax and TransUnion did not respond at all, while Experian sent a statement in lieu of an interview. As is often the case when I ask what they did, my request sort of ended up at their industry association, even though I hadn’t asked to speak to anyone there.
Francis creighton, who heads the Consumer Data Industry Association, also said he was dismayed that, according to FICO, information on rent payments made up less than 1% of the data that companies and others sent to offices.
“It’s a very big problem,” he said. “We desperately want this information recorded. “
For the credit bureaus to get it, however, landlords – including hundreds of thousands of people who own apartments here or three-apartments there – would have to hand it over.
“They have no incentive to do it,” said Laurie Goodman, vice president of housing finance policy at the Urban Institute. It’s only worth it if everyone contributes, as landlords could then use this new data collection to filter tenants. And not everyone is contributing at all right now.
Since the credit bureaus don’t have the rental data that Fannie Mae and others want so badly, Fannie has developed a somewhat obscure workaround involving a “desktop tariffer” validation engine and orders from. “Asset verification”.