The New York Times is reporting that City Comptroller Scott Stringer will introduce a plan that will encourage landlords and NYC property management companies to give tenants the ability to opt into allowing their rent payments be reported in order to boost their credit scores. Experian announced an opt-in program since 2010 and it only shows on time payments of monthly rent.
Mr. Stringer along with many advocates believe that this plan will have the effect of having individuals move into the middle class. Advocates have stated in the past that having no or low credit makes persons without the ability to build their credit history more susceptible to sub-prime lending. In these instances they pay more for housing and automobiles making it harder to move up in the economic sphere.
The Comptroller’s Office took a sampling of tenants paying less than $2,000 a month and they found that 76 percent of them would have increased credit scores if their rental payments were included. Mr. Stringer states “This could create a powerful credit history that could lift you out of poverty,”
The Comptroller’s plan is to expand the plan to N.Y.C.H.A housing. Approximately 400,000 are houses in 326 properties throughout the City with the New York City Housing Authority. In a report conducted by N.Y.C.H.A the New York Times reports
In zip codes where one in 10 residents were living in a N.Y.C.H.A. property, the average credit score was less than 630, while the average score in the city was 673. Credit scores were lower in rent-heavy or poorer neighborhoods, like the Rockaways in Queens, and higher in the Queens communities of Bayside and Little Neck where there are more homeowners.
About 30 percent of the low-income residents in the analysis would get a credit score for the first time and would have an average score of 700, which is well within the range of a good credit score”
Although there seems to be advantages to the reporting of payment of timely rental payments, there may be some drawbacks. Some mentioned include tenants losing the leverage of having landlords fix complaints by withhold rental payments. That has been a major driving force into having some landlords in the City make necessary repairs. Also, the reporting may have a costs associated with it which will be borne by the tenants.
NYC property management companies will have increased burdens and costs associated and there have been no indications of what incentives the Comptroller’s Office will give NYC building management companies to be on board with his plans.