Always Pay the Rent? It May Help Your Mortgage Application.

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Always Pay the Rent? It May Help Your Mortgage Application.


“While credit history is a key element in evaluating a borrower’s ability to make a mortgage payment, building credit in the United States is not an equitable endeavor,” said Hugh Frater, Fannie Mae’s chief executive, in a blog post.

So rent should count for something. But according to FICO, which uses data from credit reports to build scoring systems that are already part of the mortgage underwriting process, only 0.3 percent of the 80 million or so adults who live in rental housing have any mention of rent in their credit files.

How can this be? I wanted to talk to the three dominant bureaus — Equifax, Experian and TransUnion — about renters. Equifax and TransUnion did not reply at all, while Experian sent a statement in lieu of an interview. As is often the case when I ask after their doings, my request somehow ended up at their industry association instead, even though I hadn’t asked to speak with anyone there.

Francis Creighton, who runs the Consumer Data Industry Association, said it, too, was aghast at the fact that, according to FICO, information on rent payments made up less than 1 percent of the data that companies and others sent to the bureaus.

“It’s a really big problem,” he said. “We desperately want that information on file.”

For the credit bureaus to get it, however, landlords — including hundreds of thousands of people who own an apartment here or a three-flat 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 worth doing only if everyone contributes, because then the landlords could make use of that new collection of data to screen tenants. And everyone is very much not contributing at present.

Given that the credit bureaus don’t have the rental data that Fannie Mae and others want so much, Fannie developed a somewhat abstruse workaround involving a “desktop underwriter” validation engine and orders for “verification of assets.”



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