Has the Reporting of Rental Data to the Credit Reporting Agencies (CRAs) Increased?

In 2015, FICO introduced FICO® Score 9, which scores rental data. This coincided with the first evidence of sufficient positive and negative rental data at the CRAs, an important condition for adding this data into the FICO Score algorithm. Rental data is included in all FICO Score versions since FICO Score 9, including FICO Score 10T.  This means some consumers without loans or credit cards can receive a valid FICO® Score via their rental payment history, and others can observe increases in their FICO® Score via their rental payment history, in both instances potentially leading to access to more affordable credit.

That said, these positive impacts can only be realized if consumers’ rental payment data is reported to the credit files, and therefore available to be fed into the FICO Score calculation. Which raises the question: how much rental data is being reported to the CRAs?  

Rental Data in Credit Bureau Files Today: Still Relatively Little, But Growing!

When we first reported on this topic in 2017, rental data was still quite sparse with just 270,000 consumers having rental payment data showing in their credit file.

Much like with utility and telco data, rental data has long been quite rarely encountered in consumer credit files. That said, there is clear evidence that the reporting of rental trades is growing:

• Of the roughly 77 million US adults who live in rental housing, recent analysis of nationally representative sample of consumer credit files found that 2,700,000 (or 3.5%) of those consumers have a rental trade line reported in their credit file.  This represents a more than ten-fold increase in the prevalence of rental reporting in less than a decade.

• To provide a little more detail on the current state of rental reporting and it’s impact on consumer credit scores: our latest research found that only 0.07% of scorable consumers (less than 1 in 1300) went from having no credit account to becoming FICO scorable as a result of the inclusion of rental data currently found in their credit file. In the context of mortgage lending, just 0.06% of scorable consumers had scores that met the generally accepted FICO Score cutoff of 620 or greater while having all of their credit accounts being rental.

So, while rental reporting hasn’t reached the level where it would significantly move the needle as far as scorable rates or access to credit, there is no question that inclusion of rental data in consumer credit reports is steadily and materially increasing.

How Do We Get More Rental Data to Score?

Rental data has the potential to improve credit access, so why do we see so little rental data being reported?

The challenges of achieving broad national scale in rental reporting are significant. The first is the disaggregation of the furnisher market - much of the rental market is single property landlords. The second is a regulatory compliance hurdle -  there is a general aversion among potential furnishers to take on the operational and compliance risks posed by becoming a CRA data furnisher.

We would encourage policy makers to support the broader inclusion of rental data at the CRAs to support consumers’ access to affordable credit. Should rental data start to flow into the credit report in more meaningful volumes, the FICO® Score 9 and 10 suites can recognize the tens of millions of consumers living in rental housing for their successful history of on-time rental payments.

In the meantime, scores like FICO® Score XD and UltraFICO, which analyzes non-traditional credit data found outside of the traditional credit report, are available to provide an onramp to mainstream credit for people with limited credit experience.