At the same time as the foreclosure crisis of the late 2000s turned homeownership into a lost dream, as millions traded down to rentals, the credit reporting industry faced its own crisis. It was losing influence over a key market segment: homeowners. In this new economic climate, as America’s ratio of homeowners to renters declined, the credit reporting industry wooed landlords as aggressively as it once courted mortgage lenders and banks. In 2011, Experian introduced RentBureau, a service that offers rent-payment history to landlords so they might “reduce the risk of skips, bad checks, evictions and property damage.” There was no escape for renters. (The reports aren’t included in credit reports and must be requested separately by tenants.) Soon after, TransUnion debuted SmartMove, accompanied by the claim, “15 percent better eviction prediction than a typical credit score.” Equifax also offered screening reports. Next came the rent-payment platforms like PayYourRent and RentTrack. They made paying the rent more expensive. (RentTrack, for example, charges $9.95 a month.) The platforms track who has paid on time and funnels that data back to the credit bureaus, which aggregate it and sell it back to landlords.
Still, after the Great Recession, there were 26 million Americans with no credit records, according to the Consumer Financial Protection Bureau. In a research brief prepared by the bureau, which was formed in the aftermath of the foreclosure crisis to protect Americans from predatory financial services, they were described as the “credit invisibles.” Another 19 million Americans were considered “unscorable” because their files were too thin. The research also exposed vast inequities in the credit system across racial and class lines: Almost 30 percent of consumers in low-income neighborhoods were credit invisible, and Black and Hispanic people were more likely to be credit invisible. “This is a huge hindrance to personal opportunity,” Richard Cordray, the C.F.P.B. director at the time, wrote in “Watchdog,” a memoir published last year.
The industry, in consultation with the C.F.P.B., wanted to integrate “alternative data,” such as rent and utility payments, into credit reporting. The push aligned with their business interests, especially when it came to products with renter credit scores for landlords. Cordray saw the push as good public policy — a form of “financial empowerment.” In March 2019, Experian introduced Experian Boost, with a $47 million ad campaign that year and another $69 million campaign the next year, according to Kantar. At the time, Experian claimed that more than 100 million Americans couldn’t access credit. For the “credit invisibles,” Boost promised an immediate and free “boost” to credit scores. By this February, more than six million people had signed up. But boosting wasn’t hassle free: Experian required read-only access to a bank account to track whether bills were paid on time. Immediately after downloading, the offers start: a $249.99 annual subscription to CreditWorks Premium, $9.99 monthly for Experian IdentityWorks Plus.
Niffenegger tried Boost before she was evicted from her condo; she tried it again after she was living in Room 323. With no checking account to link to — her Wells Fargo account had been closed after service fees pushed her into a negative balance — it was futile. She used a prepaid phone, had no utility or cable bill, which were included at Siegel Select, and hadn’t had any money to pay rent in months. “That didn’t do anything for me,” she says.
For people whose financial lives were improving, their increased visibility to the credit bureaus was pitched as upside. But what if you couldn’t make rent or pay the gas bill on time? As of the beginning of March, 8.8 million families were behind on rent, and 9 percent of renters were reporting that they were likely to be evicted, according to the Consumer Financial Protection Bureau. Early in the pandemic, a bill in the House called for a suspension of negative credit reporting. It never got through the Senate, even as consumer complaints about financial companies rose by more than 50 percent in 2020, according to the U.S. Public Interest Research Group. In late April 2020, Senators Elizabeth Warren and Brian Schatz sent letters to the three major credit bureaus. “Months of late or missed payments could add up to not just a mountain of debt but a cratering credit score,” the senators wrote. “Permanently marred credit scores pose a risk to individuals and to our collective recovery.”
All this financial surveillance of America’s poor has helped lead to the creation of a permanent credit underclass. A survey conducted in the fall of 2018 in Norcross, Ga., a city of about 17,000 outside Atlanta, concluded that nine of the city’s 14 hotels, motels and extended stays had become “primarily residential facilities.” When the respondents — 70 percent of whom were Black — were asked to name the biggest barrier to more permanent housing, one person after another cited bad credit. “They are trapped by the credit bureaus,” says Malik Watkins, an affordable-housing researcher at the Carl Vinson Institute of Government at the University of Georgia, who was an author of the survey. In Gwinnett County Public Schools, the largest school system in Georgia, 91 bus stops at hotels, motels or extended stays pick up nearly 600 students.
In the nearby Clayton County School District, Morcease Beasley, the superintendent, began looking closely at the rise of extended stays in the county in 2019, and he now considers their growing prevalence in Atlanta and in Clayton County — where the population of almost 300,000 is 73 percent Black, with a 16 percent poverty rate — a full-blown crisis, and one directly tied to the disproportionate harm of bad credit in Black communities. In his district, there are 21 regular school-bus stops at hotels, motels or extended stays. It is Georgia’s fifth-largest school district, and among its 55,000 students, about 2,000 are classified as homeless every year. “Tenants are penalized for life happening to them, so much so that you can’t recover,” he says. “Once their credit is damaged, we don’t give people another chance.”