Rental Payment Reporting Boosts Mortgage Eligibility

As rental payment reporting is growing across the country and among the Nationwide Consumer Reporting Agencies (NCRAs), VantageScore found that millions of American renters could become eligible for a mortgage by incorporating on-time rental payments into their credit reports.

That stat — derived from a comprehensive analysis of more than 600,000 U.S. renters and data from rental reporting platform Esusu — appears in VantageScore’s latest white paper released on Wednesday.

VantageScore said the results demonstrate that rent is both a strong indicator of repayment risk and a tool for greater financial inclusion.

The study analyzed the impact of this positive rental data on the renter’s VantageScore 4.0 credit score. It found that adding consistent, on-time rent payments to credit files improves the predictive performance of the VantageScore 4.0 credit scoring model.

The data helps to identify up to 11% more defaults in higher-risk score ranges and delivers a 3.7% increase in overall predictive accuracy.

When timely rental payment data is added to credit files, consumers previously considered “credit invisible” achieve an average VantageScore 4.0 of 654. Nearly all — 99.7% — receive a score of at least 620, which meets the minimum mortgage eligibility threshold under current guidelines from Fannie Mae and Freddie Mac.

Consumers who qualify for a VantageScore 4.0 credit score of 620 or higher after adding positive rental payment data perform on par with other borrowers who have the same score, according to the findings.

VantageScore also noted that incorporating positive rent data could have a significant impact on the mortgage market. The company estimates that including on-time rental payments in credit files could translate into as much as $777 billion in potential mortgage origination volume.