The COVID-19 pandemic has had a harsh impact on millions of consumers, especially consumers at the margins of the American economy. Yet, credit scores continue to remain stable or increase, even among renters, who are more likely than homeowners to be people of color. While renters remain vulnerable to economic gyrations, the CFPB recently found that renters’ credit scores have gone up. As Bloomberg reported, “renters’ credit scores grew by 16 points, compared with 10 points for mortgage borrowers and seven points for other homeowners…”
The CFPB data is informative because there are many people who wish to limit or prohibit the reporting of rent payments into the consumer reporting ecosystem. Such restrictions are misguided and do a disserve to millions of consumers who are or could benefit from more rent reporting to consumer reporting agencies.
Among the findings of the CFPB report:
- “Despite adverse labor market conditions, renters’ financial circumstances appeared, on average, to improve as much as or more than those of homeowners. Renters’ credit scores grew by 16 points during the pandemic, compared to 10 points for mortgagors and seven points for other homeowners.:
- “Among renters, some credit outcomes among groups who qualified for targeted pandemic relief appeared to be more responsive to policy changes than those among other groups. For example, credit scores among renters with student debt leapt 40 points during the first months of the pandemic. Additionally, delinquency rates among renters with children saw a considerable decline following stimulus payments during the pandemic (dropping from 42.1% to 34.4%), perhaps reflecting that stimulus payments could be larger depending on the presence of children in the family.”
Overall, volatility and uncertainty remain the norm, but the data from the CFPB tells a good story about how renters’ credit scores have fared. The report is another reminder of the importance of having rental payment information reported and scored to give consumers help to get into or to stay in the financial mainstream.
Eric J. Ellman is Senior Vice President for Public Policy and Legal Affairs at the Consumer Data Industry Association (CDIA) in Washington, DC. He also served for eight months as Interim President and CEO of the Association. More