Buying a home, buying a car, cell phone payments, going to college, insurance rates, security deposits, renting an apartment…
These are just a handful of real-life examples that are affected by our credit scores. Among other factors, credit scores are established and improved through regular, on-time payments and present credit usage (the amount of your available credit you owe at a given time). These are further impacted by our ability to show consistency over time — often taking into account years of financial actions.
For many Americans, however, building a good credit score — or establishing a score in the first place — can feel impossibly out of reach. It takes years to establish good credit, and even longer to fix poor credit. The burden of poor credit prevents individuals from achieving the very assets they need to improve their credit — until recently.
California Senate Bill 1157 (SB-1157)
Thanks to the progressive first-time legislation of Senate Bill 1157 (SB-1157), many Californian residents living in affordable multifamily communities will soon be able to put their hard-earned money to work. The bill introduces the opportunity to build credit by making consistent rental and utility payments —- an encouraging step toward financial freedom for many American renters.
Rent Dynamics & The Credit Builders Alliance
The Rent Dynamics team met with the Credit Builders Alliance (CBA) to discuss how this momentous bill is the start of something big for the American resident population. The law requires assisted/subsidized multifamily communities in California to offer their residents’ the option of rental and utility payment reporting to credit bureaus on their behalf. The conversation highlighted the massive opportunity within the multifamily industry as a whole, while shedding light on why the CBA sponsored SB-1157, which goes into effect on July 1st. Organizations like the Credit Builders Alliance, Mission Asset Fund, Prosperity Now, and others, worked with Senator Bradford to ensure that this bill would address residents’ need for a solution that puts them on the path toward financial freedom, through building credit.
“1 in 3 adults in the US are credit challenged”, Sarah Chenven of the CBA tells us. “This includes 53 million people who are unscorable, which means that they just don’t have enough experience with credit to have a credit score. And then 38 million who have subprime credit scores.”
Within this population, Sarah also tells us that residents are seven times more likely than homeowners to be missing credit scores. This is an issue that truly hits home with the resident population, who may feel the catch-22 of needing a favorable credit score to be able to establish and build credit.
The Credit Access and Inclusion Act provided an initial framework that affirmatively authorizes the legitimacy of rental and utility payments as viable data to be furnished. This act, increased pressure from the affected populations, and other similar initiatives, fueled the creation of the CA legislation. SB-1157 has also caught the attention of other state and city governments, indicating this national issue should be part of the larger multifamily housing discussion. When examining the impact communities’ systems and tools can have on residents’ financial wellbeing, there’s a huge opportunity presented by SB-1157.
The CBA ran a pilot experiment with eight affordable housing providers across the country, which demonstrated that rent reporting is a powerful credit-building strategy. The pilot had over 1,000 participating residents across eight different properties/housing providers. 100% of the residents who started with no established credit score became scoreable (at, or near-prime rate of 660+) with the addition of the rental tradeline. Following the pilot period, the participating residents were in an improved position to take advantage of their credit scores and achieve their financial goals.
RentPlus as a Rent Reporting Solution
Rent Dynamics’ RentPlus product enables residents to build their credit scores by making regular rental and utility payments. Landlords, property managers, owners, and operators can offer this tool to encourage their residents to avoid delinquent payments, but to also take care of their residents and provide meaningful value. Offering an amenity that can put your residents on the path toward their financial freedom is invaluable. Plus, your residents will actually use it. With retention rates close to 95%, the RentPlus technology is an easy-to-use solution that actually sticks, leading to increased resident-satisfaction rates. Rent reporting is just one key component that contributes to a multifamily community’s health and stability.
RentPlus was born from the discovery of the shocking lack of tools readily available to residents looking for opportunities to increase their credit score. With an effective and easy-to-use rent-reporting tool and the passage of SB-1157, Rent Dynamics is more focused than ever on helping American residents.
How it Works
RentPlus reports on-time rent and utility payments to credit bureaus, so residents are able to build credit. It’s that simple.
Residents experience other positive impacts from the use of the tool’s additional benefits, including:
- Rent reminders
- Credit tips
- Money management
- Custom financial courses
The RentPlus technology allows residents to establish skills and habits that encourage credit-conscious goal-setting and long-term financial wellbeing. The education available within the tool also teaches residents how to track budgets and savings goals in order to live debt-free. The educational features are free to the resident through participating in RentPlus, as an added bonus.
Where to Start
Rent Dynamics’ RentPlus credit building solution for residents is a low-risk program, (with a $1 million credit fraud protection policy), that allows property managers to offer a unique and life-changing amenity.
According to the CBA, the rent-reporting pilot showed the most positive impact on the success of the program was property managers or the housing provider staff involvement. Those who spent time strategizing the integration of rent reporting into r their existing systems and their existing touchpoints with residents were the most successful.
Talia Kahn-Kravid from the CBA says, “When thinking about adding anything new to your workflow, it can feel overwhelming, but just taking a little bit of time to think about how you’re going to add this in … it will take some capacity in the beginning, and will work smoothly afterward.” A small change today can truly leave a lasting impact on your residents’ lives, and the end result will ultimately lead to higher resident satisfaction and retention.
This is an important issue in the multifamily industry to pay attention to, when considering solutions that empower residents to take their financial freedom into their own hands. The state of California is mandating that this is offered in affordable communities starting in July 2021.
For more information, check out our full podcast conversation with the CBA:
(EMBED AUDIO PLAYER)
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