New HUD & PERC Report Shows Boost to Credit Scores When Reporting PHA Rent Payments

Date Published: 
February 20th, 2020

A new HUD and Policy and Economic Research Council (PERC) report, “Potential Impacts of Credit Reporting Public Housing Rental Payment Data,” examines how including public housing rent payments in credit reporting could affect the credit scores of low-income, HUD-assisted individuals. The report details the findings of a joint study that used data from the Seattle Housing Authority, the Housing Authority of Cook County (HACC), and the Louisville Metro Housing Authority. The study showed a significant boost in credit scores for low-income families when reporting these rental payment data and found that many of the participating households would cease being “credit invisible.”

Analyzing credit scores of more than 9,000 households from these PHAs, the study found that reporting these rental payment data led to a significant increase (between 51 and 65 percent) in the number of HUD-assisted tenants with credit scores above 620. Including these data also nearly eliminated credit invisibility among HUD-assisted tenants: in one risk model, the rate of ‘unscoreable’ tenants fell from 49 percent to seven percent, and in another risk model this rate fell from 11 percent to zero percent. However, the study also found that many HUD-assisted tenants still have subprime credit scores that can limit their housing choices and ability to obtain insurance.

“Credit invisibility affects an estimated 54 million persons,” said report co-author and PERC President Dr. Michael Turner in a press release. “Through no fault of their own, families are trapped in a credit Catch 22—in order to qualify for credit, you must already have credit. Without a credit report and score, these families are forced to turn to high-cost lenders. This study shows a path to affordable mainstream credit for many HUD-assisted tenants and renters of all types.”

“More and more landlords throughout suburban Cook County are using credit score checks to determine whether or not to accept a tenant’s application, especially in areas of opportunity,” said Richard Monocchio, HACC Executive Director. “For our low-income tenants, many of whom have low or non-existent scores due to their circumstances, this means an automatic denial. HACC is proud to have participated in this groundbreaking study and is excited to explore a path forward given the promising findings.”

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