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Comptroller Wants Paying Rent on Time to Count Toward Credit Score

Starrett City, also known as Spring Creek Towers, a housing complex in Brooklyn. The city comptroller, Scott M. Stringer, joins other advocates around the country promoting credit building as a way to climb into the middle class.Credit...Johnny Milano for The New York Times

Hundreds of thousands of New Yorkers pay their rent on time every month without seeing those payments counted toward their credit scores, which can be used to determine how much they pay in interest rates on loans or even for cellphone service.

Unlike homeowners who pay a mortgage, renters do not reap the benefits for their dutifulness and punctuality — a distinction that Scott M. Stringer, the city comptroller, called “an issue of inequality” in a city overwhelmingly filled with renters.

On Monday, Mr. Stringer announced a plan to expand efforts to encourage landlords and property management companies to give tenants, especially low-income tenants, the ability to opt in to reporting their rent payments as a way to boost their scores. Looking at a sampling of tenants paying less than $2,000 a month, Mr. Stringer’s office found that 76 percent of them would see their credit scores improve if their rental payments were included.

“This could create a powerful credit history that could lift you out of poverty,” he said.

Mr. Stringer joins a chorus of advocates around the country promoting credit building as a way to climb into the middle class. People with low credit or no credit, known as “credit invisible,” are often targeted by subprime lenders or pay more for insurance, automobiles, utilities and phones since companies can legally tack on “risk-based” charges, according to the analysis completed by the comptroller’s office. The credit invisible are mostly black and Hispanic renters, creating racial disparity on top of an economic one, according to the report.

Widespread participation in New York City would be a coup for a campaign that has seen little traction and has detractors who question whether rental reporting could hurt low-income people more than help them.

The New York City Housing Authority, which houses about 400,000 people in 326 properties, has a pilot program that allows tenants to report their rent payments. But as of last week, it had “one person on board,” said Tischelle George, a senior adviser at the housing authority.

Mr. Stringer wants to expand the N.Y.C.H.A. program, and Ms. George said plans were underway to recruit residents from Queensbridge Houses, where about 7,000 people live.

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, the report said. 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, the report said.

Advocates for low-income people and tenants have been pushing the reporting of rental payments since Experian, a credit rating firm, first introduced an opt-in program in 2010. So far, only on-time payments are reflected in the reports.

But seven years in, such reporting is not being used extensively.

Reporting can feel “onerous” for landlords and property management companies that must set up mechanisms for reporting and must comply with the Fair Credit Reporting Act, a federal law that requires accurate reporting that can be challenged by consumers, said Sarah Chenven, deputy director of Credit Builders Alliance, a nonprofit that helps low- and moderate-income households improve their credit.

Sajata Epps, a textiles and clothing designer who has lived in the same apartment in the Bronx for 17 years, said she planned to enroll in the program because she believed her timely payments could enhance her credit score.

Ms. Epps, 40, did not know her current score but said she was not approved for a line of credit about three years ago despite paying off school loans and the delinquent credit card she had in her 20s. “I’m looking forward to seeing how this reflects on me getting more credit and a line of capital from my business account,” said Ms. Epps, a leader of the Kelly Street Block Association.

Ms. Epps’s landlord, Banana Kelly Community Improvement Association, is on board with Mr. Stringer’s plan.

Advocates have persuaded some landlords by touting benefits, such as an incentive for tenants to pay rent on time.

But that incentive threatens to disenfranchise renters who have long used rent withholding as a way to force landlords to improve poor housing conditions, according to the National Consumer Law Center, a nonprofit that is an advocate for low-income and disadvantaged consumers.

“There’s definitely pitfalls to it when the landlord-tenant relationship is not good, and in New York City, that’s pretty frequent,” said James B. Fishman, a New York City tenant lawyer.

Mr. Fishman said there were sometimes fees for reporting rent, which would be passed on to the tenant. He also said the city had some special rental situations — for example, older and disabled tenants and tenants who pay reduced rent — that could complicate reporting. “These are things that need to be factored in the calculations,” he said. “It’s unlike anywhere else in the country.”

A version of this article appears in print on  , Section A, Page 21 of the New York edition with the headline: A Push to Count On-Time Rent Payments Toward Credit Scores. Order Reprints | Today’s Paper | Subscribe

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