In November 2021, we worked with Freddie Mac Multifamily on a rent reporting initiative that would bring financial tools into the hands of renters nationwide. We knew the impact of the work would be broad-reaching, but less than 18 months later, we’re seeing the real-world influence that rent reporting has had.
This initiative has brought rent reporting into more than 1,400 properties across the country, and over 184,000 units are now reporting their rent payments through Esusu. Many of the renters in these units did not have a credit score when the initiative began, and today 27,393 renters have established a credit score for the first time. Of all of the residents who saw an increase in their credit scores because of rent reporting, the average increase through the duration of the initiative was 46 points. As the initiative grows, these numbers are growing too.
What excites us most about these metrics is understanding what these new and improved credit scores mean for renters. What we’ve learned is truly amazing.
New credit lines
Lower-income households are most likely to be unbanked and the least likely to have a savings cushion or access to credit to weather inflation or financial emergencies. According to the FDIC, as of 2017, 80% of unbanked households also did not have a credit score (compared to 20% of all American households).
The ultimate goal of creating and building credit is better access to affordable, traditional bank credit that makes wealth-building in America possible. Traditional credit lines include credit cards, car loans, student loans, mortgages, and personal loans available at much lower interest rates than those from predatory lenders.
These new and improved credit scores through the Freddie Mac initiative with Esusu have led to 102,089 renters establishing a new line of credit.
How renters are using this new access to credit
One of the most valuable and popular credit lines we saw renters open was car loans, with 16,900+ car loans granted to those with new or improved credit.
Extensive research by the Federal Reserve Bank of Chicago explains that car loans have a significant economic impact on low- to moderate-income (LMI) households. Why? The top reason is that cars get people to their jobs. 76.9% of workers use cars to get to work (a combination of driving alone or carpooling).1 When you exclude employees who work from home (an option many LMI workers do not have), that number jumps to more than 91%.1
Cars can help people access more profitable jobs too. According to the Federal Reserve Bank of Chicago, in a study where people without cars received subsidized vehicles, 75% could find better jobs or increase earnings.1
There’s also the advantage of being able to pick up gig economy work, get better access to food to build healthier lives, and access better education opportunities.
The initiative has been so successful that Freddie Mac Multifamily is making it even easier for borrowers to access these incentives for residents of multifamily properties with Freddie Mac financing. Eligible borrowers can now access one year of Esusu services for free. This includes rent reporting and access to social impact reporting that helps owners and operators support their ESG strategies.
Any borrower who wants to take advantage of the initiative can contact Esusu directly at FRE@esusu.org or on our website at esusu.com/freddie-mac.
1. “The Importance of Cars and Car Loans for People with Low and Moderate Incomes,” Federal Reserve Bank of Chicago, July 2022.