Renters looking to purchase in this hot market could now get an advantage when looking for a loan through Fannie Mae. The mortgage leader has announced it will begin considering on-time rent payment history as part of mortgage approvals, offering an assist to aspiring homebuyers with spotty or insufficient credit reports.
As noted by the report in Yahoo Finance, credit records have not factored in rent payments because few landlords provide the information to credit bureaus. Rental data currently appears on just 5 percent of credit records for renters.
The new policy at Fannie will take effect on Sept. 18, using new technology to check rent payment histories electronically through bank statements.
“It seems obvious that if someone is paying rent consistently it’s likely they could and would pay their mortgage consistently, too,” Fannie Mae CEO Hugh Frater said in the company announcement.
Freddie Mac says it’s working to include rent payments in its mortgage reviews as well.
For more on the policy change, click here.