SFR Operators Helping Residents Build Positive Credit History

Single-family home rental operators are taking considerable steps toward helping their residents improve their credit scores and, in some cases, remove their “credit invisible” status by working with service providers who report on-time rental payments.

By doing so, residents potentially see an increase of 20 to 100 points on their credit scores if their rental history does not contain any late payments, according to one single-family rental home operator.

For residents without an existing credit score, they can potentially achieve one in the mid-600s simply by adding on-time rental payments to their credit file.

By improving their credit scores, residents can be granted improved access to credit, mortgages, and other financial services that were previously out of reach.

Progress Residential, for one, initiated a customer policy in Q1 2022 through leading fintech company Esusu’s financial health rent reporting platform and 99% of its residents have opted in. To date, 6,372 residents established a first-time credit score.

This achievement is a significant milestone for Progress renters, as they transition from no longer being credit-invisible to actively building their financial independence.

Samir Goel and Wemimo Abbey, Co-Founders and Co-CEOs of Esusu, said they “aim to catalyze significant strides towards our vision of bridging the racial wealth gap and paving pathways to prosperity for residents in single-family rental homes.”

Progress Residential said that 57% of its residents experienced an improved credit score, with those living in some states (Maryland and Minnesota) reaching the 60% threshold.

Progress Residential actively promotes its rent reporting policies as a notable benefit of choosing its properties. It utilizes email campaigns and publishes information on its website to inform and educate potential residents about the reporting program’s advantages.

Miles Adams, Chief Operating Officer of ARK Homes for Rent, said his company also partners with Esusu and residents receive an introductory brochure about the program and are enrolled automatically at move-in.

To date, the average resident credit score has been boosted by about 30 points over the reporting period since implementation in January 2023, Adams said.

“Our residents appreciate the benefit of this program as some aspire to eventually own their own home,” Adams said.

Kyle Scheiner, Partner, Romer Debbas, who provides legal counsel and representation to clients in various aspects of transactional real estate and real estate financing, said renters can turn their rental payment history into positive credit marks on their credit reports because landlords are able to report rent payments to the credit bureaus like any other creditor.

For many, “rent payments are the only way for a person to boost their credit scores,” Scheiner said. “These types of renters typically are living off their debit cards and take public transit to get around and thus don’t have the opportunity to positively build their credit.

“By reporting the payment history, the landlord is helping their tenant get access to basic consumer credit items such as car loans and credit cards.”