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Through technology created by Esusu Financial, Freddie Mac will incentivize rent reporting of on-time rental payment data from property management software platforms to the credit bureaus. However, if renters miss their payments, the technology will automatically unenroll them from the program so that it will not affect their credit scores if they’re struggling financially.
Freddie, the biggest purchaser of multifamily loans in the US, will provide closing cost credits on loans to rental property owners who agree to report on-time rental payments through Esusu’s platform. The firm has also negotiated discounted fees for Esusu’s services, which reports rental payments to the credit bureaus – Equifax, Experian, and TransUnion. The Esusu platform can even deliver up to 24 months of past on-time rent payments, which can have an immediate and positive impact on the renter’s credit scores.
“At present, the most common way for rents to be reported to the credit bureaus is when there is a missed payment that has gone to a collections agency,” said Alexis Sofyanos, senior director of equity in multifamily housing at Freddie Mac. “Freddie Mac wants to flip that script so that renters who pay their rent on time and in full each month get credit for doing so while also putting in safeguards for the most vulnerable.”
Samir Goel and Abbey Wemimo, co-founders of Esusu, said that the initiative allows the company to address credit invisibility – an essential first step toward addressing renter financial stability, the executives stressed.