The city of Rochester’s Office of Financial Empowerment has launched a pilot program to help renters boost their credit scores through on-time payments.
The program is described as a “positive only” rent reporting system, meaning late payments will not hurt credit, but on-time payments can help build credit. Under the program, participating city landlords would submit reports to credit bureaus on on-time payments from renters.
“For many low-income families, rent is the largest expense they pay, but until now, those payments haven’t counted to building credit,” Mayor Malik Evans said at a news conference Monday. “I have a mortgage, and guess what, that counts toward my credit score. A car payment counts toward your credit score. A credit card payment counts toward your credit score.”
The program is being launched through a partnership with the Washington D.C.-based Credit Builders Alliance. That organization is behind similar programs across the country, including in Buffalo, New York City, and Salamanca, a small city in Cattaraugus County on the Allegany Indian Reservation.
The organization claims that the average renter who participated in these programs saw an increase of 55 points on their credit score. Likewise, the organization reported that all participants who previously had no credit were able to develop a score during programs in other areas, and 80% saw a positive increase in their credit.
“Those who participate are signing up for something they’re already doing—paying their rent,” said Rachel Levy-Culler, housing innovations specialist with the Credit Builders Alliance. “This opportunity doesn’t require them to take on any new debt, and it doesn’t add stress to their cash flow.”
Evans pointed to a Federal Reserve Bank of New York report from 2016, which found that about one in five Rochesterians have no credit history, about double the national figure.
The pilot program will include three housing providers: the Rochester Housing Authority, Hart Homes, and Rosey Property Management. The city estimated that those three organizations would be able to offer the program to about 4,100 city renters.
The pilot program will last for six months, at the end of which participating housing providers will be offered $6,000 each to pay to submit the data to the credit bureaus.
Evans said he hopes other housing providers will opt into offering the program going forward.
“Four thousand people is a lot of people to start with when you’re starting from zero,” Evans said. “This is a pilot program, so we hope to show that it works, and once we show that we have proof of concept, we hope to expand it.”
