In January, the U.S. Department of Housing and Urban Development (HUD) published a new frequently asked questions (FAQ) document on positive rent reporting, marking its first stance on a rapidly growing practice in the affordable housing industry. Although not legally binding, HUD’s guidance clarifies best practices for rent reporting, allowing tenants to build their credit history by reporting on-time rent payments directly to the credit bureaus.
Poor credit can present challenges even if a person doesn’t want to borrow money and simply seeks housing. “The biggest barrier to moving into private housing is not that people can’t save enough money for the deposit,” says Dara Duguay, CEO of Credit Builders Alliance (CBA). “The issue is that they may not be able to pass the tenant screening that nearly all private apartment complexes require. If you’re credit invisible, you either won’t pass the tenant screening, or you may end up paying more for a security deposit.”