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Freddie Mac Seeks to Increase On-Time Rent Reporting and Improve Renter Credit Scores

Freddie Mac Seeks to Increase On-Time Rent Reporting and Improve Renter Credit Scores
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Home.com Staff

More renters will have on-time rent payments to improve their credit score under a new initiative by the housing rule-making agency Freddie Mac.

Freddie Mac announced a plan to encourage apartment housing operators to report on-time rent payments to the three major credit-reporting bureaus that calculate homebuyers’ credit scores. Currently, on-time payments build credit for less than 10% of renters because most landlords do not deliver this information to credit bureaus.

The new initiative incentivizes rent reporting through a platform created by Esusu Financial Inc. The commercial lending arm of Freddie Mac will provide closing cost credits to buyers of multifamily housing (apartment buildings) that agree to use the platform to report on-time rent payments. It also negotiated a discount price for the rent-reporting platform.

“Rent payments are often the single largest monthly line item in a family’s budget but paying your rent on time does not show up in a credit report like a mortgage payment,” said Michael DeVito, CEO of Freddie Mac. “That puts the 44 million households who rent at a significant disadvantage when they seek financing for a home, a car or even an education. While there remains more to do, this is a meaningful step in addressing this age-old problem.”

Mortgage lenders use credit scores, among other things, to determine the loan programs and mortgage rates available to borrowers. In some cases, a single point can be the difference in thousands of dollars in interest.

“Rent payments are often the single largest monthly line item in a family’s budget but paying your rent on time does not show up in a credit report like a mortgage payment,”

Michael DeVito, CEO of Freddie Mac

The Esusu platform automates credit reporting between property management software and all three major credit bureaus while adhering to industry compliance standards. By making it easier and less of a compliance burden, Freddie Mac hopes to increase credit reporting among landlords and allow more renters to build credit through on-time rent.

The system reports up to 24 months of timely payments which can positively impact renters’ credit scores. The Esusu platform also unenrolls renters after missed payments and prevents damage to the credit profiles of struggling renters.

That’s a substantial shift from the way credit reporting is done now.

“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.” 

The Freddie Mac one-time rent initiative comes a few months after fellow Government Sponsored Enterprise Fannie Mae tweaked its underwriting system algorithm to identify one-time rent payments and use them as an indicator of creditworthiness for applicants with thin credit profiles.

Between the two initiatives, more renters can build up their homebuying profiles one rent payment at a time.


Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.

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