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WASHINGTON – Credit unions seeking to aid lower income members would be wise to investigate opening a relationship with Pay Rent Build Credit, a key tracker of consumer payment data which includes such items as rent and utility payments and other sources of credit history which are not traditionally tracked on credit reports. Executives with PRBC made their suggestion after announcing their firm’s agreement with the National Consumer Reporting Association on October 3. Under the terms of the new agreement, NCRA will help verify consumers’ information reported through the PRBC network and will provide PRBC information to financial institutions and mortgage brokers. NCRA claims to be the trade association that represents 66% of the firms which prepare credit reports that are used in mortgage lending, and Terry Clemans, NCRA executive director said his organization’s involvement will help open up the mortgage market to lower income Americans across the country. “Credit unions seeking to help their low income members improve their financial situations have a real opportunity now,” said Michael Nathans, CEO of PRBC. “We are asking credit unions to report their low income members’ use of their bill paying services, with the members’ consent, and record the rent and utility bill paid on time.” Nathans said that PRBC, which was incorporated in March 2002, had as its goal helping lower income American’s get credit for the good financial habits which are all too often overlooked in other credit evaluations, particularly those which have an impact in mortgage lending. “Studies have shown that paying bills on time, particularly rent, can be a very good indicator of future financial behavior and credit risk,” explained Nathans. “Rent is unlike credit card bills or auto loans,” he said, “because it relates directly to housing and is akin to making a mortgage payment.” PRBC is funded by a grant from the Ford Foundation and from its charter data subscribers, Fannie Mae, Freddie Mac and Citimortgage. Currently, in addition to credit unions and banks, PRBC is encouraging landlords and property management firms, along with other utilities and consumers themselves, to take part in the PRBC’s reporting effort. One of the ways PRBC is different than other credit bureaus is that PRBC allows consumers to self-report, Nathans explained. “After all, if they haven’t had the credit bureaus reporting their good information before it seems unlikely that they are going to start very soon so we are encouraging them to report themselves.” Any data on payments supplied by consumers is subject to checking and verification by PRBC, a process which NCRA will help standardize and improve, executives with both organizations said at the October 3 press conference announcing their agreement. PRBC hopes that landlords will begin reporting their tenants’ performance because they will want the market edge that telling perspective tenants that renting their properties will help build their credit. The landlords will also want the increased number of on-time rent payments that such reporting will likely encourage, the organization said. While optimistic about the eventual impact their agreement may have, executives with both organizations were quick to say it might be as long as three to five years before their information lowers the cost of credit for lower income consumers because of the need to standardize the reporting and for brokers and lenders to gain confidence from the reports. “In a sense, we aren’t doing anything terribly new here,” Nathans said, pointing out that HUD’s Federal Housing Assistance (FHA) program has long recognized the timely payment of rent as a way of establishing creditworthiness for a mortgage. Part of the standardization that members of NCRA will help provide include tracking down the three years of recorded rent payments that lenders say provide a much higher standard for measuring creditworthiness, as well as keeping track of payments on mortgages awarded on the basis of such information as well as scoring the information to help lenders evaluate it.” “We recognize that it is going to take time for this information to begin moving into the broader community,” said Clemans, “but we believe this is definitely a strong first step.” Others interested in the development of mortgage information agreed. Representatives of the Center For Financial Services Innovation and the National Association of Mortgage Brokers were on hand to praise the agreement between the two organizations. [email protected]

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