Introduction to NYC’s Initiative
credit score concept on the screen of smartphone, take credit
Tenants in affordable housing will soon be able to apply rental payments to their credit scores through a new pilot program that Mayor Eric Adams will announce Thursday, amNewYork has learned.
The Pilot Program
The pilot program will help tenants report on-time payments to major credit bureaus to assist with home ownership. The Department of Housing Preservation and Development (HPD) and Housing Development Corporation (HDC) are partnering with rent-reporting platform Esusu to start the program, which will reach about 500 HPD- and HDC-financed affordable households in the next 15 months.
Goals of the Program
HPD Acting Commissioner Ahmed Tigani told amNewYork that the program aims to transform financial outcomes for low-income families, who are typically excluded from traditional systems.
“We’re concerned about how to connect vulnerable families, families with limited access to credit, to greater opportunities and financial products to improve themselves and their families,” Tigani said.
“It’s something that we tried to craft so that it ultimately creates more opportunities for those renters who are part of it in the future to have more freedom to do what they want to do,” he added.
Ahmed Tigani, HPD’s first deputy commissioner.
HPD
The Importance of Credit Scores
Higher credit scores help unlock access lower interest rates on mortgages, lower premiums for insurance, better credit card offers and a higher standing in financial institutions. While paying back a loan or mortgage improves a credit score, paying monthly rent generally does not.
In New York City, 69% of households are renters and over half of rented units are in some affordable rent-regulation program for lower-income New Yorkers, according to city data. There are also stark racial disparities: while 41% of white families own a home, only 26% of Black families and 18% of Hispanic families do.
Racial Disparities in Credit Scores
Credit scores themselves also face racial disparities. The share of communities of color with suboptimal credit scores is 2.6 times higher than that of white communities in New York City, according to the Urban Institute.
Mayor Adams’ Statement
Mayor Adams said in a statement that the program will help many Black and Brown New Yorkers apply for mortgages and buy houses.
“Unfortunately, too many of our city’s residents, especially Black and Brown New Yorkers, are still struggling to make the jump from renter to homeowner and build generational wealth,” Adams said. “We will unlock the promise of homeownership for more New Yorkers and double down on our efforts to make New York a more affordable city that is the best place to raise a family,” Adams added.
Similar Programs and Their Impact
Colorado ran a similar pilot from 2021 to 2024 in which participants’ average credit score increased by 62 points, which Tigani pointed to as an example of the program’s potential.
The Adams Administration’s Focus on Home Ownership
The Adams administration has focused on home ownership in its affordable housing strategy, which experts say is a path to building generational wealth and ultimately decreasing economic inequality.
The rent credit reporting program is part of Adams’ “City of Yes for Families” initiative, which encourages affordable housing and quality-of-life improvements.
Breaking Cycles of Poverty
HDC President Eric Enderlin said in a statement that the program will help break cycles of poverty and income inequality.
“Traditional methods of calculating credit scores have contributed to barriers faced by low-income households when seeking a safe, stable and affordable home — further perpetuating cycles of poverty and inequality,” Enderlin said. “As we continue our efforts to expand access to New York City’s affordable housing supply, we are proud to partner with our colleagues at HPD to deliver solutions that will further strengthen residents’ financial well-being and promote economic mobility for New Yorkers citywide.”
Conclusion
The pilot program is a significant step towards helping low-income renters in NYC boost their credit scores and access economic opportunities. By reporting on-time rental payments to major credit bureaus, tenants can improve their credit scores and increase their chances of becoming homeowners. The program aims to transform financial outcomes for low-income families and break cycles of poverty and income inequality.
FAQs
Q: What is the purpose of the pilot program?
A: The pilot program aims to help low-income renters in NYC boost their credit scores by reporting on-time rental payments to major credit bureaus.
Q: How many households will the program reach?
A: The program will reach about 500 HPD- and HDC-financed affordable households in the next 15 months.
Q: What are the benefits of the program?
A: The program will help tenants improve their credit scores, increase their chances of becoming homeowners, and access lower interest rates on mortgages and better credit card offers.
Q: Why is the program important for low-income families?
A: The program is important for low-income families because it helps them access economic opportunities and break cycles of poverty and income inequality.
Q: How does the program address racial disparities in credit scores?
A: The program addresses racial disparities in credit scores by providing low-income families, particularly Black and Brown New Yorkers, with the opportunity to improve their credit scores and access economic opportunities.
