Residents in Louisville’s public housing system will soon have the chance to start building credit by paying rent.
The Louisville Metro Housing Authority is partnering with the Credit Builders Alliance to offer the program to residents.
The city’s housing authority is among five similar entities across the country to launch such a program, said Sarah Chenven, director of programs and strategic initiatives for Credit Builders Alliance. The group is a Washington, DC-based nonprofit that works to increase individuals’ wealth capacity.
Rental payments aren’t traditionally reported to credit bureaus, which can make it tough for renters to develop good credit scores. This lack of recognition can present an “incomplete and negatively skewed assessment” of a renter’s credit, according to Chenven.
Local housing advocates call the program an innovative method to help low-income public housing residents build the financial wherewithal to get loans for homes, cars and tuition.
“If you are excluded by circumstance from building positive credit, then all these things are really difficult and expensive to do,” said Cathy Hinko, executive director of the Metropolitan Housing Coalition. She said helping residents who rent build positive credit scores “will open doors.”
“Even employers look at credit scores,” she said.
The program will be voluntary and is expected to open to public housing residents in the coming months, said Tim Barry, executive director of the city’s Metro Housing Authority.
Residents who sign up will be able to track up to three years of past rent payments, he said.
The city’s housing authority has about 3,300 public housing units available to residents, according to Barry. Current capacity rates hover in the upper 90 percent range, and a “clear majority” of tenants make timely rent payments, he said.
About 17,000 people are on a waiting list to get into public housing in Louisville. Barry said the “endgame” is to reduce that number by getting current residents on sound financial footing, to help them make the decision to move out — if they choose — and allow new residents to move in.
“A majority of our residents would like to get in a position to be able to do that,” he said.
Once the program gets underway, Barry said housing officials would begin encouraging Section 8 landlords to get involved. The Credit Builders Alliance allows independent landlords to participate.
About 50,000 people in the Louisville Metro area rent, according to a 2013 report from the Metropolitan Housing Coalition. Nearly 22 percent of those earn more than $50,000 annually, per the report.