On February 8, Neighborhood Allies sponsored two events attended by over 50 people with national nonprofit, Credit Builders Alliance, whose mission is to move people from poverty to prosperity through credit building.

The afternoon event, designed as a training for case managers, covered the basics of credit-building and  taught participants about how credit is a key to economic opportunity. For instance, credit is necessary to securing car loans, decent rental housing, affordable rates on cell phones and insurance, utilities and employment. Yet 45% of consumers in low-income neighborhoods are credit invisible or unscorable, and minorities are two times more likely to have limited credit records (Consumer Financial Protection Bureau). Credit building — or, establishing/maintaining active trade lines that are reported by creditors to the major credit bureaus — puts the focus on what can be done now to create opportunities for the future.

The morning event, designed for developers and managers of affordable housing, focused on building credit through reporting timely rent payments. “Rent reporting for credit building” is the regular monthly reporting of tenant rent payments to at least one of the major consumer credit bureaus for inclusion on consumer credit reports paired with credit/financial coaching and financial education. The goal is for residents to build credit as a foundational asset and leverage improved credit to achieve financial goals. Rent reporting helps build credit without assuming credit card debt or adding to existing monthly budgets.

A national pilot has shown rent reporting to be effective in most cases at improving credit scores and decreasing late payments. The pilot concluded that positive rent reporting offers a significant creditbuilding opportunity to residents living in affordable housing. Of the pilot participants: 100% who initially had no credit score became scorable at either the high nonprime or prime level. 79% of participants experienced a credit score increase by an average of 23 points

Neighborhood Allies will be working with CBA over the next year to implement a rent reporting program with interested housing managers. Contact Sarah at sarah@neighborhoodallies.org for more information, or see this resource and this video.

Thank you to our hosts of these events NeighborWorks of Western PA and Housing Alliance of PA!