Freddie Mac is one of the largest lenders for multifamily buildings in the United States. In 2021, the organization launched its Credit Building Initiative and found that, of the 44 million renting households in the United States, the vast majority did not see their on-time rent payments reported to the major credit bureaus.

Freddie Mac began working with Esusu in November 2021. The two companies had a similar goal: helping low- and moderate-income families reach financial security by making rent reporting attainable for as many renting households as possible.

Over a year and a half since the initiative began, the results show a massive shift for renters, borrowers, and lenders.

Residents accessed new financial opportunities

Since Freddie Mac started working with Esusu in November 2021, 1,400+ properties signed up to bring rent reporting to their residents. This resulted in more than 240,000 renters in over 184,000 units reporting on-time rental payments. Of those renters, over 27,000 established credit scores for the first time.

“Having access to credit, and ultimately building credit, impacts opportunities and the affordability of so many expenses,” says Corey Aber, VP of Mission, Policy, and Strategy at Freddie Mac Multifamily. “Through the reporting of on-time rental payments, we’re helping renters establish credit that will improve their financial well-being.”

Esusu data found that these new and improved credit scores opened up massive economic opportunities for renters. So far, 102,000+ renters have opened new lines of credit with their new or improved scores, including 16,900+ new car loans.

At first glance, a car loan might seem like a low-priority item for someone with newly established credit, but a car can often be the first step to increased economic security. 76.9% of American workers rely on a vehicle to get to their jobs. That number increases to 91% when adjusted for work-from-home employees. A car can open renters to a wider range of more lucrative jobs offering financial security.

Benefits for Freddie Mac borrowers and lenders

Residents are seeing clear benefits of rent reporting, and so are Freddie Mac borrowers.

When residents maintain the financial stability and increased access that comes with an improved credit score, property owners and operators can see lower rates of eviction and renter turnover. Borrowers are finding that rent reporting makes their properties more marketable. According to a TransUnion study from November 2021, 2 out of 3 residents said they’d prefer a property that offered the service as an amenity.

Because of the benefits of rent reporting, more properties expressed interest in implementing rent reporting. Freddie Mac and Esusu worked together to expand the offering to help residents at more properties access the initiative. As of April 2023, Freddie Mac borrowers can enroll their properties in one free year of Esusu.

Optigo lenders like Berkadia are also seeing benefits.

“Our goal at Berkadia is to make sure that our clients always have access to the best capital available so they can grow their businesses and provide the best housing opportunities to their renters,” explained David Leopold, SVP and Head of Berkadia Affordable, Berkadia.

“A big reason we became so involved with the initiative was to help our clients grow the ESG programs that are so crucial to them and their residents.”

Creating opportunities through education

Establishing credit scores for renters was just the first part of the solution. Many low-income residents, especially those who had been credit-invisible before they began reporting, were eager for resources on what to do with the new financial opportunities they had gained.

Renters accessing rent reporting through the initiative also have access to Esusu’s Renters Marketplace, which helps educate renters on credit and connects them to financial literacy resources.

It includes access to Freddie Mac’s financial literacy hub, CreditSmart Essentials, which offers free financial education to help renters set themselves up for financial success as their economic stability improves.