Having poor credit or no credit history at all can have ripple effects for a person who is already in a precarious financial situation. A person's credit history tells a story to lenders, landlords, and service providers; therefore, a poor credit history can make it difficult to find affordable housing, buy a home, or even procure common goods and services such as a cellphone, furniture, or car insurance.
AHC, a nonprofit housing developer that offers residential services in Arlington, Virginia, and Baltimore, Maryland, is one of our network organizations that is helping people to change the story that their credit history may tell.
An innovative tool AHC uses is reporting residents' on-time rent payments to credit bureaus to help residents build or repair their credit. AHC serves primarily low-income, unemployed or under-employed residents, and, in particular, AHC Greater Baltimore's Resident Services program offers services designed to help stabilize families and improve their financial situations. It began incorporating rent reporting into its financial capability services about five years ago as part of the Credit Builders Alliance's Power of Rent Reporting Pilot program.
In a recent webinar hosted by Prosperity Now, titled "Credit Building Through Rent Reporting," several experts, including Allison Pendell Jones, from AHC, discussed the benefits of rent reporting.
Reporting residents' on-time payments of rent and utilities can improve their credit histories, without requiring them to take on additional debt to do so. "For us, it was one step that we could take to help level that playing field," said Pendell Jones.
Pamela (her name was changed to protect her privacy), a resident at AHC's MonteVerde property, said during the credit building webinar that she had been "looking for a restart" by moving to the property. She has been participating in the credit reporting program for about two years, during which time she has seen her credit score rise from the 400 range to nearly 700. "That's a lovely benefit," said Pamela.
When AHC launched its rent reporting program, it initially used a third-party processor to manage the reporting. Last year, it streamlined the enrollment process for residents, eliminating the extra step of having them enroll with the third-party processor to make their rent payments.
Residents can now easily opt into the program. The setup and promotion of this new system was supported in part by an Innovation Grant that AHC received from NeighborWorks, said Pendell Jones.
To further expand the positive effects of rent reporting, AHC makes financial coaching part of the process. "Everyone [is] encouraged to meet with a financial coach as a part of this program because coupling those [services] is obviously critical," said Pendell Jones.
We feel proud of the work that AHC does to increase their residents' financial capability, because at NeighborWorks America, financial capability is a cornerstone of our work. Together, with our network organizations, we provide the education, tools, and resources needed to help individuals and families to achieve financial health, adopt healthy financial attitudes and behaviors, and make sound financial decisions.
Learn more about AHC's financial capability programs and how they are making a difference in their residents' lives. Learn more about our financial capability programs at NeighborWorks.
04/15/2019
