AUGUSTA - The Maine House gave final approval this week on bipartisan legislation sponsored by Rep. Sam Zager, D-Portland, that would help low-income Mainers establish or improve credit through their rental payments.
As amended, LD 1107 would create a two-year pilot program at the Maine State Housing Authority to voluntarily connect renters' favorable payment histories to the databases of national credit agencies, such as Equifax, Experian and TransUnion. Participation in the program would help improve renters' credit scores and help landlords affordably navigate the Fair Credit Reporting Acts legal requirements. Maine State Housing would later report back to the Legislature on the effectiveness of the program.
"Too many Mainers have difficulty establishing credit for major purchases, foregoing lifetime investments like buying a home or accessing post-secondary education, contributing to growing income inequality and generational wealth disparities," said Zager. "Renter credit reporting builds credit for low-income residents and helps the market function more efficiently."
On-time mortgage payments contribute to an individual's credit history and score, but rental payments do not. This leaves renters at a disadvantage in the marketplace and contributes to a long-term lack of access to building generational wealth.
The bill received widespread support, including from Maine State Treasurer Henry Beck, the Maine State Housing Authority, the Maine Real Estate Managers Association, Coastal Enterprises and the Central Maine Apartment Owners Association (CMAOA). Additional oral testimony can be found here.
"Unlike paying against a mortgage, rent does not regularly get considered as a component of a person's credit score," said Erik Jorgensen, senior director of government relations and communications at the Maine State Housing Authority. "The concept of positive credit reporting is emerging as an important strategy to help renters build credit and improve their financial health. That will help landlords. That will help tenants. This is a true win-win proposition."
"Improving financial capability of Maine people is not officially a function of the Office of the State Treasurer," said State Treasurer Henry Beck. "But we see the issues related to LD 1107 as especially important to the States overall fiscal health."
"CMAOA is committed to educating landlords that a happy tenant is a paying tenant. A paying tenant becomes a paying taxpayer and neighbor," said Dan Bernier on behalf of the Central Maine Apartment Owners Association. "Reporting positive paying history to credit [agencies] would be a great way to support good tenants to become good buyers."
The measure was initially approved by the Senate on May 23 and faces additional votes.
Zager, a member of the Health and Human Services Committee, is serving his second term in the Maine House and represents part of Portland.
Contact:
Brian Lee [Zager], c. 305-965-2744