Mortgage Research Network Podcast

Welcome to the Mortgage Research Network Podcast. Just a note that this podcast is AI-generated, but the article on which it's based was produced by people. This podcast's content is also reviewed for accuracy. And your hosts, Tim and Craig, are real people. Without further ado, let's get into today's topic.
I'm your host, Tim Lucas, editor of MortgageResearch.com and a former mortgage professional, and with me is Craig Berry, a mortgage originator with 25 years experience.
Thanks for having me.
Today we're covering a new trend that could help prospective homebuyers. Landlords can now report rent payments to credit bureaus, helping renters build credit history with each rent payment, something they have to do anyway.
That sounds like it could be a nice boost for renters with limited credit profiles.
For sure. Millions of Americans are missing out on building credit simply because their biggest monthly payment isn't being reported. And that's weird because a rent payment is more like a mortgage payment than any other bill people have. Yet, it's often invisible to future homebuyers' credit reports. A new study by Urban Institute shows that adding rent payments to credit could increase near-prime credit scores by 25 percentage points.
Well that's fascinating because most people don't realize their rent payments, which can easily be $20,000 or more annually, aren't helping build their credit at all.
Exactly right, and here's what makes this so significant. the Urban Institute just completed the first-ever randomized study on rent reporting, and the results are pretty eye-opening. We're talking about a potential game-changer for the 44 million renter households in America.
So what exactly happens to someone's credit score when their rent starts getting reported?
Well, think about this. if you're paying $1,500 monthly in rent, that's showing consistent management of an $18,000 annual financial commitment. The major credit bureaus have started factoring in rental payments when landlords report them. The impact can be substantial, especially for those with limited credit histories.
Hmm... but I imagine there must be some potential downsides we should consider?
Oh absolutely. it's only beneficial if you're making those payments on time. Late payments or evictions could seriously damage your credit score if they're being reported. It's kind of like adding a powerful tool to your credit profile that could work either for or against you.
You know what's really interesting about this? It seems like it could help address some of the systemic inequities in our credit system.
That's EXACTLY what makes this so important. The traditional credit system has often overlooked people who manage their money responsibly but don't have traditional credit products. And here's a striking statistic. 68% of tenants actually prefer landlords who report to credit bureaus, because they understand the value of building their credit history.
Well that brings up an interesting point about the practical side. how do renters actually get their landlords to start reporting?
So there are several specialized platforms now. Companies like FrontLobby, Rent Ready, and Rental Kharma streamline the reporting process. But here's the key. landlords need to see the business benefits. The data shows that reporting can reduce late payments, improve tenant retention, and enhance their screening abilities.
That makes me wonder about the costs involved. who typically pays for these reporting services?
Most platforms charge a small monthly fee, which can be paid by either party. But here's some perspective - even a 1% difference in a future mortgage rate on a $300,000 home could mean saving $200 monthly. Over a 30-year mortgage, that's more than $70,000 in savings just from having a better credit score.
Those numbers really put it into perspective - this isn't just about credit scores, it's about long-term financial opportunities.
Exactly, and what's particularly interesting is how this could impact different generations. Younger renters, who might not have traditional credit-building opportunities, could use their rent payments to establish credit history. The Urban Institute found it's "exceedingly difficult" to participate in the US economy without good credit, yet many people find themselves unable to build their credit records.
So what would you say is the most important takeaway for renters who are interested in this?
Well, I'd say it's about being strategic and proactive. Ask your landlord if they are reporting, and if not, suggest some low-cost options to do so. But most importantly, make absolutely sure you can consistently make those rent payments on time, because once they're being reported, every payment becomes part of your financial story.
And for landlords? What's the compelling argument for them?
You know, it's really about modernizing their business practices. The data shows that rent-reporting landlords tend to attract more responsible tenants, have fewer payment issues, and maintain better long-term relationships with their renters. Plus, in today's competitive rental market, offering credit reporting could be a significant differentiator that helps attract and retain quality tenants.
Looking ahead, do you think this could become the new standard in the rental market?
Well, given the potential benefits for both parties and the growing focus on financial inclusion, I think we're going to see this become increasingly common. The key will be making the reporting process as seamless as possible for landlords while ensuring that renters understand both the opportunities and responsibilities that come with having their payments reported.
That's about all the time we have for this topic, but we go into even more detail on the site. To learn more, go to Mortgage research.com and type landlord credit reporting in the search bar at the top of the homepage. We'll see you next time on the Mortgage Research Network Podcast.