Esusu is working to fix a fundamental injustice in our credit system, and helping both renters and real estate owners and operators along the way.
Since its founding in 2018, the company’s rent reporting program has helped millions of renters create or improve their credit and has been so successful that Freddie Mac, a Government Sponsored Enterprise (GSE), worked with Esusu to bring the service to its borrowers around the nation. The Real Deal sat down with Samir Goel, co-founder and co-CEO at Esusu, Corey Aber, vice president of Multifamily Mission, Policy & Strategy at Freddie Mac, and Jonathan F.P. Rose, founder of Jonathan Rose Companies, to learn about this program’s far-reaching impacts on renters’ lives and real estate owners and operators’ bottom lines.
What It Means to Be Credit Invisible
Goel founded Esusu with Wemimo Abbey to solve one of the major financial problems of our time.
“45 million people in this country are credit invisible,” explains Goel, “and there’s close to 100 million more that are what you would consider to be credit thin or have poor credit.” Oftentimes, having a low or non-existent credit score is not the fault of the consumer; as Goel puts it, “Credit treats you as though you’re guilty until proven innocent.” Being credit invisible or credit thin prevents one from engaging in basic economic activities, from getting approved to rent an apartment to qualifying for a car loan, and even to securing certain jobs.
As Goel says, “These are things that a lot of people in this country take for granted.”
Goel identified renters as the key population where these credit issues were manifest. “Renters are disproportionately lower income, and are more likely to be immigrants or members of minority groups,” he says. “They’re a segment of the population that is not being served fully by financial services.”
One of the major differences between renters and homeowners is that rent payments are traditionally not captured in an individual’s credit score, while mortgage payments, which go toward a loan, typically are. Essentially, people who can afford a mortgage get the double benefit of building equity while bolstering their credit score by paying off the loan, while renters get neither.
“Rent is a renter’s single largest payment, and it wasn’t being reported to credit bureaus on a positive basis,” says Aber, who leads the Freddie Mac team that is responsible for mission-related work, including the credit building initiative. “This was a tremendous missed opportunity for renters.”
Leaving rent payments out of credit reports also puts real estate owners and operators at a disadvantage by hiding information about renters with a history of on-time payments. “Enabling residents to benefit financially from their on-time rental payments is of huge benefit,” explains Rose. “We are committed to finding ways to help residents in affordable housing achieve financial security. Being able to demonstrate a history of on-time rent payments will help residents access affordable housing, improving long term housing stability.” Esusu is the perfect partner philosophically as well as financially for Rose, whose mission-driven affordable and mixed income housing firm has a long history of enhancing the health and wellness of its residents through high quality, energy efficient affordable housing and impactful resident services provision.
“If You Want to Go Far, Go Together”
Goel and Abbey named their company after a saying in the Yoruba language in West Africa. “It means, ‘If you want to go fast, go alone. But if you want to go far, go together.’ It’s what we stand for. All our futures are inextricably tied together.”
Esusu’s flagship product is a rent reporting service that reports on-time rent payments to all three credit bureaus (Equifax, Experian, and TransUnion). This way, renters are able to build credit and gain access to fundamental financial services without having to change their behavior. Along with their rent reporting service, Esusu also pairs qualifying renters with 0% interest loans via a 501c3 partner to help them cover rent shortfalls that can otherwise create a snowball effect on their credit score if they fall behind.
“It shouldn’t be so hard for people putting their best foot forward every day, to have that fighting chance,” says Goel. “That’s where Esusu can help.”
Lifting Up Renters
The results of Esusu’s rent reporting system have been profound. “By incorporating rental data, renters with an existing credit score see an average improvement of 36 points,” says Goel, “and with renters who are credit invisible, we can establish a credit score 100% of the time, which allows them to begin qualifying for decent financial products.”
For an esoteric, 3-digit number, one’s credit score has an incredible effect on the quality of a person’s opportunities. “Having a credit score represents economic mobility,” explains Goel, who told us that renters across the Esusu platform have unlocked $22 billion in economic opportunity split between mortgages, car loans, student loans, credit cards, and other products. “So it’s not just a number, it enables people to pursue dreams and aspirations in a way that they couldn’t before.”
Rose told us that, after implementing Esusu’s rent reporting program, “71% of our renters have improved their credit scores, with 9% of residents moving from subprime credit to prime credit. It’s been a great benefit for our renters.”
Reliable Renters Benefit Real Estate Owners and Operators
Esusu’s rent reporting program is also designed to benefit real estate owners and operators. “Because rent reporting services are still fairly uncommon,” says Goel, “being able to offer something that presents economic opportunity to renters is a great way for real estate owners and operators to set themselves apart from their competitors.”
Rent reporting is just one of the services Esusu offers; it also provides bridge loans to renters who might otherwise miss a payment, keeping them from falling behind. The Jonathan Rose Companies has successfully implemented Esusu’s programs across its affordable housing portfolio.
“Thanks to the resident bridge loans that Esusu provides through their non-profit partners, we’ve enabled residents to stay current with their rental balances and continue to build their credit score, while at the same time recovering the cost of the Esusu service through continued rental payments made possible by the microloans,” Rose told us. “They’re doing a tremendous service to residents and to the real estate industry.”
Freddie Mac Credit Building Initiative
Since 2021, Esusu has joined forces with Freddie Mac to provide their rent reporting service to the GSE’s clients on a cost-neutral basis. “We were looking for organizations that were similarly mission-driven to us,” recalls Aber, “and we were looking for ways to make the market work better.”
Today, more than 514,100 renters as of Jan. 2024 are reporting their on-time rent through Esusu’s work with Freddie Mac. Furthermore, 53,785 as of Dec. 2023 of those renters established credit scores for the first time. Property owners who borrow from Freddie Mac have the opportunity to qualify for 12-24 months of free access to Esusu’s rent reporting service, making it a cost-effective way to bring the solution into their properties.
Goel praises Freddie Mac for taking the initiative on and providing rent reporting on a large scale.“Freddie has really taken a proactive role in championing rent reporting as a whole,” he says. “They’re making sure that renters get credit where credit is due.”
From their perspective, Freddie Mac’s mission aligns with Esusu’s. “Rent reporting reinforces the symbiotic relationship between renters and property owners,” says Aber. “We’re really hoping this becomes the norm across the country.”
To learn more about Freddie Mac’s initiative and access to Esusu for free, visit the Esusu website or contact fre@esusu.org.