Politicians Look To Give Renters A Leg Up With Credit Reporting. But Critics Say Move Is A ‘Trojan Horse’

A growing movement to count rent payments toward credit scores could help millions of renters become homeowners and build generational wealth. 

But whether these proposals are “a no-brainer” to improve Americans’ housing situation or “fool’s gold” is to be seen. 

This month, Sen. Jon Ossoff proposed a federal bill that would require multifamily landlords that use some form of federal financing to report on-time rent payments to credit agencies.

“Georgia families urgently need more affordable housing. That’s why I’m introducing this new legislation that will help families build credit as renters and better position them to become homeowners,” Ossoff said in a statement. Ossoff and his staff declined to comment for this story. 

The bill, which would impact renters across the nation, is now in the Senate Committee on Banking, Housing and Urban Affairs, according to the Congressional bill tracker. It has no co-sponsors and it is unclear if there is bipartisan support for the measure.

The Access to Homeownership Act is intended to give renters the same benefits of improved credit scores that on-time paying homeowners receive: higher chances for mortgage approvals, better loan terms and more favorable monthly payments. 

“When it comes to rental payments, there is no better indication of your ability to repay your mortgage,” National Housing Conference CEO David Dworkin said. “It really is the gold standard because it’s an indication over time that you prioritize your housing payment regardless of what other conditions you have. So it should be obvious it should count.”

There has been similar proposed legislation in two U.S. states as well as in Canada, but those measures have been met with blowback from tenant advocates and landlords about added costs and unintended harm to lower-income renters. 

Rent reporting to credit agencies is one of “the biggest industry Trojan horses I have ever seen,” said Eric Dunn, the director of litigation for the tenant advocacy group the National Housing Law Project. “That’s just fool’s gold that’s not going to help anybody.”

For many renters, today’s for-sale housing dynamics have dimmed hope that they will ever be homeowners. More than 40% of renters surveyed this year by the Federal Reserve Bank of New York said they doubt they will ever own a home, the lowest level recorded in the survey, and 74.2% said obtaining a mortgage would be either somewhat or very difficult, up from 50.5% in 2021.

Credit score is a major part of that. More than half of aspiring homebuyers said not having a high enough credit score is preventing them from buying a home, according to a 2018 Zillow survey, the second largest barrier behind being unable to afford a downpayment.

And the target is moving further away. Before the Global Financial Crisis in 2008, the median credit score to qualify for a mortgage was between 696 and 705. The median credit score of a first-time home buyer in 2013 was 746.

By 2022 that had jumped to 768, 51 points more than the average U.S. credit score of 717, according to a 2024 FICO study.

Renters can voluntarily get their rent payment history tracked by credit monitoring services Equifax, Experian and TransUnion. And real estate website Zillow rolled out a service this year that allows renters to make their monthly payments through it and report to credit bureaus.

But few renters are using these services, and even fewer are benefiting from them. The Urban Institute Initiative reported that less than 5% of renting households have their payment histories on file with credit reporting agencies, and most of the data that is there reflects missed payments rather than on-time ones.

Still, advocates for reporting rent payments say the upside to consumers may outweigh the risks. 

Vicki Lundy Wilbon, president of Atlanta-based development firm The Integral Group, which has built 10,000 affordable housing units over the years, said adding rent payment history to a credit score could be “transformative” to renters striving to become homeowners.

“Let’s be clear: for too many families, particularly those with modest means, access to credit is a barrier that keeps them from reaching their full potential and the American Dream,” Wilbon said in an email to Bisnow. “[This bill] offers families who have been doing their best to pay their rent each month a chance to build stronger credit scores. This could open doors to loans and credit products that were previously out of reach, helping them secure the financial stability that every family deserves.”

Yosef Adde, a realtor in Los Angeles who invests in homes and condominiums and runs I Buy LA, told Bisnow that allowing on-time rent payments to improve credit scores could increase the pool of homeowners.

“Renting and paying monthly can now be a game changer for the tenants. In places where the cost of living is too high such as Los Angeles, many people keep having to rent because they cannot access mortgages due to lack of credit records, which are based on history,” Adde told Bisnow via email. “This move could narrow that difference hence allowing more people to become homeowners.”

Legislation to report rents could also address a history of racial disparity among U.S. homeowners, said Cathy Lesser Mansfield, a lawyer and professor at Case Western Reserve University’s School of Law who focuses on consumer protection and mortgage law.

The homeownership rate among non-Hispanic whites in the U.S. was more than 73%, according to the U.S. Census Bureau, followed by 63% of Asian Americans, 49.8% of Hispanic Americans and 45.9% of Black households, a ratio that has remained relatively steady since 2000. That largely correlates with credit scores: 54% of Black and 41% of Hispanic households surveyed by Credit Sesame in 2021 had credit scores lower than 640 versus 37% of white and 18% of Asian households.

“I think it’s an issue of equity across different economic strata. But also people of color make less money, so it becomes a race justice issue,” Mansfield said. “[Legislation to report rents] seems like a no-brainer to me.”

However, these kinds of policies have encountered skepticism from housing advocates and multifamily owners alike. A state legislator in Washington State proposed a similar measure in 2023, but with a caveat that landlords would not be required to report late payments. The bill never reached a vote this year after property owners argued against the measure, saying it would be unduly costly for landlords to report and that they wanted to require reporting missed or late payments, the Seattle Times reported.

A California assemblymember’s proposal in June also encountered pushback, with multifamily owners balking at what they saw as more regulation and a financial burden and tenants concerned about the negative consequences of the bill.

In New York, some landlords have promoted rent-reporting services, but renters found they were charged extra monthly for the service or that their payment history hurt their credit ratings over time, Curbed reported in 2023. And a rent reporting proposal by Canadian Prime Minister Justin Trudeau, as part of his Canadian Renters’ Bill of Rights, has been criticized for not addressing housing affordability and supply as well as potentially hurting lower-income renters.

Even if a landlord only reports on-time payments, the missing information in the payment history file will most likely be interpreted as missed or late payments, and expanding what are now voluntary offers into mandatory programs risks the most vulnerable taking further hits to their credit scores and facing even more difficulty obtaining housing, Dunn said. 

Wellroot Family Services CEO Allison Ashe, whose firm builds affordable units for young men and women exiting the foster care system in Georgia, also said she was concerned the proposal would ultimately hurt lower-income households. 

The struggle for many households to make rent is a growing issue. Ashe said her firm has seen a rise in the number of households seeking rental assistance and housing help in recent years, so much so that her organization turned away 300 families in 2023 it didn’t have the capacity to serve.

“The way to get people out of generational poverty is homeownership. But right now, homeownership isn’t something that is reality for many many people,” she said. “It’s a major issue for our country and for families who are struggling.”

Integral’s Wilbon also echoed those concerns, adding that if the bill goes into effect, legislators need to include protections in the act so households aren’t unfairly penalized and the system doesn’t just benefit the most well-off.

“We need to recognize that for some renters, especially those who are already on the financial edge, this policy could bring new challenges. Life is unpredictable, and sometimes, despite their best efforts, people struggle to make ends meet,” Wilbon said.