Freddie Mac says it wants to help make renters more creditworthy and it’s putting its words into action with a new program that allows their rental payments to make a difference.

Under the new scheme, owners or managers of multifamily properties will be able to report on-time rental payments to credit bureaus, in a move Freddie Mac says will help some of the more than 45 million U.S. renters who have no credit score.

At present, less than 10% of U.S. renters see their on-time rental payment histories reflected in their credit score. Freddie Mac says that could prevent renters that want to become homeowners from securing the best rates on a mortgage.

“Rent payments are often the single largest monthly line item in a family’s budget, but paying your rent on time does not show up in a credit report like a mortgage payment,” said Michael DeVito, CEO of Freddie Mac. “That puts the 44 million households who rent at a significant disadvantage when they seek financing for a home, a car, or even an education. While there remains more to do, this is a meaningful step in addressing this age-old problem.”

The new program uses technology provided by Esusy Financial to help multifamily housing operators report rental payment data entered into their software platforms to the three major U.S. credit reporting agencies. It will automatically un-enroll renters if a payment is missed, which could harm their credit profile, Freddie Mac said.

“At present, the most common way for rents to be reported to the credit bureaus is when there is a missed payment that has gone to a collections agency,” said Alexis Sofyanos, senior director of Equity in Multifamily Housing at Freddie Mac. “Freddie Mac wants to flip that script, so that renters who pay their rent on time and in full each month get credit for doing so, while also putting in safeguards for the most vulnerable.”

To encourage adoption, Freddie Mac said it will provide closing cost credits on multifamily loans to rental property owners who agree to report their tenants rental payment histories through the Esusu platform.

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