Investing

Coming up with a down payment continues to be a major hurdle for many Americans.
The Federal Housing Administration is one of the main government agencies that offers low down payment mortgages for qualifying homebuyers in the U.S.
Here’s what to know.

Department of Housing and Urban Development
Source: Department of Housing and Urban Development

Tens of thousands of federal workers have lost their jobs in recent weeks as the Trump administration attempts to slash government spending.
Employees at the Federal Housing Administration could be one of the next targets, according to Antonio Gaines, president of the American Federation of Government Employees National Council 222, a labor union that represents the largest number of employees at the Department of Housing and Urban Development.

It’s unclear how many and what type of workers are at risk of losing their jobs within the FHA, an agency under HUD.
“It will not be near the 40% to 50% range that other program areas are experiencing, but there will be some cuts,” Gaines told CNBC.
HUD Secretary Scott Turner launched a Department of Government Agency Task Force in February to review HUD’s budget and look for ways to cut spending.
Bloomberg reported a potential 40% slash to the agency’s headcount. HUD did not return CNBC’s requests for comment, but HUD officials told Bloomberg that the 40% figure is “not accurate.”
The White House did not respond to requests for comment.

More from Personal Finance:Social Security plans to cut 7,000 workersTrump, DOGE job cuts may be biggest in historyFunding freeze stymies Biden-era consumer energy rebates
The FHA is one of the main government agencies that offers low down payment mortgages for qualifying homebuyers in the U.S. FHA loans can require as little as 3.5% down for qualifying borrowers, which include first-time buyers, low- and moderate-income buyers and buyers from minority groups.
About 15% of mortgaged home sales used an FHA loan in December, up from mid-2022’s decade-low of roughly 10%, according to Redfin. The rise could be a sign of the competition in the housing market winding down, Chen Zhao, a Redfin economist, recently told CNBC.
Here’s what potential staff cuts to the FHA could mean for homebuyers in the U.S. down the line, according to experts. 

How fewer staffers at FHA can affect homebuyers

While it remains to be seen if FHA staff cuts materialize, and to what extent, any layoffs should not affect the ability for borrowers to get an FHA loan, said Melissa Cohn, regional vice president at William Raveis Mortgage. But they may slow the process.
“Fewer loans will get approved in the same time period because there are just fewer people working on them,” she said.
Ingrid Gould Ellen, a professor of urban policy and planning, and director of housing and urban policy at New York University, agreed, saying “I can imagine the cuts potentially leading to delays at all stages.”
That could mean it takes longer to receive approvals, or resolve any issues between the loan originator and FHA after the loan closes, she said. 
“These delays would ultimately lead to higher costs of mortgages,” Gould Ellen said, as it will take more time to close a loan and lock in an interest rate.

FHA staff typically run borrowers’ applications through a model program that determines whether or not they get approved for a loan, said Richard Green, director and chair of Lusk Center for Real Estate at University of Southern California.
In some cases, the system will flag applicants as “exceptions,” or individuals who need to go through manual underwriting. This can be a “labor intensive process,” he said. 
“For those who got loans through manual underwriting, I would imagine it’s going to take longer,” if there are staff cuts, Green said.
With fewer FHA staff workers available, third-party loan officers who are tasked with processing FHA loans could potentially charge higher fees to compensate for the added labor, he said.
“People’s time has value. And if you’re telling loan officers that they’re going to have to take more time to do an FHA loan, it will show up in cost,” Green said.

Higher fees could eat into how much a buyer is able to put down. This will ultimately further burden individuals who are seeking out low-down payment mortgages because they don’t have enough savings to fully cover upfront costs.

‘Business as usual’ for now

“So right now, it’s business as usual,” she said.
But keep in mind that any staffing cuts could affect how long it takes to get an FHA loan, Cohn said: “Buyers who are looking to buy today are going to have to take more time to get the deal done.” 
Slower processing times could make your offer less competitive, especially if sales in your market typically close in shorter periods, she said. 
For instance, if you’re shopping in a place where it usually takes 30 days for a transaction to complete, “a seller might not be willing to wait” any longer to get an FHA deal to close, Cohn said. 
Therefore, if you’re a first-time homebuyer on the market, you may benefit from casting a wide net when searching for mortgage financing. Look at down payment assistance programs at the state or local level, which can help you put down more and broaden your lending options, experts say. More

In December, the median down payment among homebuyers was $63,188, up 7.5% from a year ago, according to a recent report by Redfin.
But for most, coming up with a down payment is still a “very significant” hurdle, according to a new report by Bankrate.

Alvarez | E+ | Getty Images

Home prices have been rising, and so have down payments.
The median down payment among homebuyers in December was $63,188, according to a recent report by Redfin. That’s up 7.5%, or about $4,000, from a year prior.

“That is mostly reflecting the fact that home prices have increased,” said Chen Zhao, an economist at Redfin.
On top of high home prices, other issues homebuyers face include high inflation, volatile mortgage rates and limited savings balances.
The typical homebuyer down payment was equal to about 16.3% of the purchase price in December, when the median home-sale price was $428,000, per Redfin data. 
More from Personal Finance:1 in 5 Americans are ‘doom spending’Trump plan to freeze funding stymies Biden-era energy rebates for consumersSocial Security expedites timeline for benefit increases tied to new law
While homebuyers are putting down more cash for their home purchases, down payments continue to be a major hurdle.

A new report by Bankrate found that 81% of would-be buyers say that down payment and closing costs are obstacles toward owning a home some day. For 52%, the hurdle is “very significant” while for 29% it’s “somewhat significant.”
The survey conducted by YouGov Plc polled 2,703 U.S. adults in mid January.

What to know about low-, no-down-payment loans

There are low- and no-down-payment mortgage options across federal agencies like the Fair Housing Association, the Department of Veteran Affairs and U.S. Department of Agriculture.
The Department of Veterans Affairs offers VA loan programs, and those who qualify can put down as little as 0%. Mortgages from the U.S. Department of Agriculture, referred to as USDA loans, aim to help buyers purchase homes in rural areas and also offer 0% down payment options.
Federal Housing Administration loans, or FHA loans, can require as little as 3.5% down for qualifying borrowers, which include first-time buyers, low- and moderate-income buyers and buyers from minority groups.

You don’t get anything for free.

Melissa Cohn
regional vice president at William Raveis Mortgage

Recently, more people are using mortgage options sponsored by the government. About 15% of mortgaged home sales used an FHA loan in December, up from mid-2022’s decade-low of roughly 10%, Redfin found. The share of those who used a VA loan rose to 6.7%, from 6.2% a year earlier.
The increase could be a sign of buyers having an upper hand in the market, said Redfin’s Zhao. Typically, sellers prefer to avoid FHA loans because they can involve a longer processing time, she said. For this reason, buying with an FHA loan can be less advantageous in a highly competitive housing market.

While low-down payment mortgages can help someone achieve homeownership, there may be additional costs involved.
With less cash upfront, you will need to borrow more, making your monthly mortgage payment much higher, experts say. And you could also face higher mortgage rates.
“The best priced loans are going to do a larger down payment, so the less you put down, the higher the rate is, the greater the risk,” said Melissa Cohn, regional vice president at William Raveis Mortgage.
With a down payment of less than 20%, you may be subject to private mortgage insurance, or PMI, which is added to the monthly mortgage payment.  
Meanwhile, mortgage lenders tend to offer better loan terms to borrowers who put more cash up front, or make 20% down payments. Benefits can include lower interest rates, reduced fees and favorable repayment terms. While a 20% down payment can be daunting, it’s certainly not a requirement. You can buy a house with much less up front. Here’s what to know.
PMI can cost anywhere from 0.5% to 1.5% of the loan amount per year, depending on factors such as your credit score and your total down payment, according to The Mortgage Reports. For example, on a loan for $300,000, mortgage insurance premiums could cost from $1,500 to $4,500 a year, or $125 to $375 a month, the site found.
“You don’t get anything for free,” said Cohn. 

‘Time isn’t a nemesis’

In Bankrate’s survey, respondents said they expect that coming up with a down payment will take years.
But “time isn’t necessarily a nemesis,” said Mark Hamrick, senior industry analyst at Bankrate. “Having more time is quite virtuous.”
The time it takes to save can work in your favor. As you build your down payment savings, you can also work on paying down debt and improving your credit, so that you improve your chance of being approved for a mortgage at the best-available rate, Hamrick said.

While you’re building your down payment, look for other programs that can help you get there faster.
Aside from federally backed low-down-payment mortgage options, consider state or local assistance down payment assistance programs, which can offer aid to those who qualify, experts say. Such programs can offer grants and loans to help cover part or all of a homebuyer’s down payment and closing costs, per The Mortgage Reports.
“The good news is the federal government isn’t the only game in town,” Hamrick said. “It’s really about trying to be aware and take advantage of any potential applicable program.”
Browse online through the state agency and see if you meet the qualifications for any assistance programs or grants available in your state or area, Cohn said.
“For people who don’t have the luxury or haven’t been able to save enough, that’s a good option,” she said. More

This year, the school named by the highest number of students as their “dream” college was Massachusetts Institute of Technology, according to The Princeton Review.
MIT is both one of the most difficult schools to get into and one of the most expensive colleges in the United States. 
Despite the high cost of a private, four-year education, “don’t self-select out,” says James Lewis, president and co-founder of the National Society of High School Scholars.

Students on campus at Massachusetts Institute of Technology in Cambridge, Massachusetts.
Education Images | Universal Images Group | Getty Images

Harvard University is no longer the ultimate “dream” school, at least among current college applicants.
This year, Massachusetts Institute of Technology secured the top spot of most desirable colleges, according to a new survey of college-bound students by The Princeton Review.

Harvard fell from No. 1 after a prolonged period of controversy, marked by antisemitism on campus and the resignation of Harvard President Claudine Gay amid allegations of plagiarism.
Despite the reshuffling, there remains a common element at the top of the rankings, according to Robert Franek, The Princeton Review’s editor-in-chief. “Each of the schools are exceptional,” he said.

However, regardless of which institution they attend, for most students, the biggest problem remains how they will pay for their degree.

Cost is a major concern

A whopping 95% of families said financial aid would be necessary to pay for college and 77% said it was “extremely” or “very” necessary, The Princeton Review found. Its 2025 College Hopes and Worries Survey polled more than 9,300 college applicants between Jan. 17 and Feb. 24.
Often, which college those students will choose hinges on the amount of financial aid offered and the breakdown across grants, scholarships, work-study opportunities and student loans.

More from Personal Finance:How Musk’s DOGE took over the Education Department$2.7 billion Pell Grant shortfall poses a threat for college aidTrump’s ‘gold card’ visa opens a door for wealthy college applicants
MIT is one of the hardest schools to get into, with an acceptance rate of 4.5%. It’s also among the nation’s priciest institutions — tuition and fees, room and board and other student expenses came to more than $85,000 this year.
But MIT also offers generous aid packages for those who qualify. Among the Class of 2024, 87% graduated debt-free, according to the school.

Top colleges are seeking exceptional students from all different backgrounds, according to James Lewis, co-founder of the National Society of High School Scholars, an academic honor society.
To that end, many institutions will provide scholarships or discounted tuition, in addition to other sources of merit-based aid, he said.
For qualified applicants, “if they can go after those institutions, don’t self-select out,” Lewis said.

The return on investment: a good job

In part due to the high cost of college, students are also putting more emphasis on career placement, according to Christopher Rim, president and CEO of college consulting firm Command Education.
At MIT, for example, 2024 graduates earn a starting salary of $126,438, according to the latest student survey — nearly twice the national average. The percentage of MIT graduates employed in the months immediately after graduation has edged lower in recent years, while the share enrolling in graduate school has trended higher.
“Because it’s getting harder to find a job, students are more focused on what they are going to do after college,” he said. “That’s a big thing for them.”

When asked what they consider the greatest benefit of earning a college degree, most students said it was a “potentially better job and income,” The Princeton Review found.
Fewer said it was “exposure to new ideas, places and people.”
Subscribe to CNBC on YouTube. More

The Social Security Administration has announced new plans to bring down costs, including efforts to reduce its head count to 50,000 from 57,000.
For some Americans, that could result in a lengthier waiting time for benefits, experts say.

The Social Security Administration office in Brownsville, Texas.
Robert Daemmrich Photography Inc | Corbis Historical | Getty Images

The Social Security Administration plans to shed 7,000 employees as the Trump administration looks for ways to cut federal spending.
The agency on Friday confirmed the figure — which will bring its total staff down to 50,000 from 57,000.

Previous reports that the Social Security Administration planned for a 50% reduction to its headcount are “false,” the agency said.
Nevertheless, the aim of 7,000 job cuts has prompted concerns about the agency’s ability to continue to provide services, particularly benefit payments, to tens of millions of older Americans when its staff is already at a 50-year low.
“It’s going to extend the amount of time that it takes for them to have their claim processed,” said Greg Senden, a paralegal analyst who has worked at the Social Security Administration for 27 years.
“It’s going to extend the amount of time that they have to wait to get benefits,” said Senden, who also helps the American Federation of Government Employees oversee Social Security employees in six central states.
Officials at the White House and the Social Security Administration were not available for comment at press time.

More from Personal Finance:Trump, DOGE job cuts may be biggest in historyFunding freeze stymies Biden-era consumer energy rebatesTrump, Musk float idea of $5,000 ‘DOGE dividend’ checks
The Social Security Administration on Friday said it anticipates “much of” the staff reductions needed to reach its target will come from resignations, retirement and offers for Voluntary Separation Incentive Payments, or VSIP. 
More reductions could come from “reduction-in-force actions that could include abolishment of organizations and positions” or reassignments to other positions, the agency said. Federal agencies must submit their reduction-in-force plans by March 13 to the Office of Personnel Management for approval.

Cuts may affect benefit payments, experts say

Former Social Security Administration Commissioner Martin O’Malley last week told CNBC.com that the continuity of benefit payments could be at risk for the first time in the program’s history.
“Ultimately, you’re going to see the system collapse and an interruption of benefits,” O’Malley said. “I believe you will see that within the next 30 to 90 days.”
Other experts say the changes could affect benefits, though it remains to be seen exactly how.
“It’s unclear to me whether the staff cuts are more likely to result in an interruption of benefits, or an increase in improper payments,” said Charles Blahous, senior research strategist at the Mercatus Center at George Mason University and a former public trustee for Social Security and Medicare.
Improper payments happen when the agency either overpays or underpays benefits due to inaccurate information.

With fewer staff, the Social Security Administration will have to choose between making sure all claims are processed, which may lead to more improper payments, or avoiding those errors, which could lead to processing delays, Blahous said.
Disability benefits, which require more agency staff attention both to process initial claims and to continue to verify beneficiaries are eligible, may be more susceptible to errors compared to retirement benefits, he added.

Cuts may have minimal impact on trust funds

Under the Trump administration, Social Security also plans to consolidate its geographic footprint to four regions down from 10 regional offices, the agency said on Friday.
Ultimately, it remains to be seen how much savings the overall reforms will generate.
The Social Security Administration’s funding for administrative costs comes out of its trust funds, which are also used to pay benefits. Based on current projections, the trust funds will be depleted in the next decade and Social Security will not be able to pay full benefits at that time, unless Congress acts sooner.
The efforts to cut costs at the Social Security Administration would likely only help the trust fund solvency “in some miniscule way,” said Andrew Biggs, senior fellow at the American Enterprise Institute and former principal deputy commissioner of the Social Security Administration.

What President Donald Trump is likely looking to do broadly is reset the baseline on government spending and employment, he said.
“I’m not disagreeing with the idea that the agency could be more efficient,” Biggs said. “I just wonder whether you can come up with that by cutting the positions first and figuring out how to have the efficiencies later.” More

President Donald Trump’s proposed $5 million “gold card” for U.S. permanent residency could attract more wealthy international students to American colleges.
One private college consultant who caters to the global rich said he has already fielded calls from interested clients.
However, Trump’s proposal comes at a time when access to a college education is increasingly in the spotlight, amid rising costs and ballooning student loan balances.

New York University graduates walk through New York’s Washington Square Park on May 9, 2021.
Alexi Rosenfeld | Getty Images

For years, restrictive student visa policies in the U.S. have limited college enrollment among international students. President Donald Trump’s proposed gold card visa program, which he said would offer permanent residency for a price of $5 million, could change that for some wealthy college hopefuls.
While the details of the initiative remain unclear, experts say the program could offer these students from overseas a new path to citizenship.

“Over the past 24 hours, we received an unusual influx of inquiries from students in China, Korea and India because of Trump’s gold card visa,” Christopher Rim, president and CEO of college consulting firm Command Education, said Thursday, two days after Trump first floated the idea.
“Now these wealthy international students have a clear path of staying in the country after graduation,” he said.
More from Personal Finance:Biden’s SAVE plan for student loan borrowers is deadHow Musk’s DOGE took over the Education Department$2.7 billion Pell Grant shortfall poses a threat for college aid
There are more than 1.1 million international undergraduate and graduate students in the U.S., mostly from India and China, making up slightly less than 6% of the total U.S. higher education population, according to the latest Open Doors data, released by the U.S. Department of State and the Institute of International Education.
“It’s a relatively small cohort, but these policies can have great value,” said Robert Franek, editor-in-chief of The Princeton Review.

International enrollment is an important source of revenue for schools such as New York University and Columbia University, which is why colleges tend to rely on a contingent of foreign students, who typically pay full tuition, according to Franek.
“We know those students are incredibly attractive because they are not applying for financial aid,” he said.
In fact, “more than 95% of four-year colleges in the U.S. are tuition driven,” Franek said. “For schools dependent on students paying tuition, we know this [visa option] is going to be a benefit.”
Altogether, international student enrollment contributed $43.8 billion to the U.S. economy during the 2023-24 academic year, according to a separate report by NAFSA: Association of International Educators.

A spotlight on college access

However, Trump’s proposed gold card also comes at a time when college access is increasingly in the spotlight.
“Clearly those families that can afford it will take advantage of that, but I don’t know what the net long-term effect on higher education will be,” said James Lewis, co-founder of the National Society of High School Scholars, an academic honor society.
“We certainly want to make college accessible for everyone,” he said.

Higher education already costs more than most families can afford, and college costs are still rising. 
Tuition and fees plus room and board for a four-year private college averaged $58,600 in the 2024-25 school year, up from $56,390 a year earlier, the College Board found. At four-year, in-state public colleges, it was $24,920, up from $24,080.
For most families, financial aid is crucial when it comes to covering the cost of college, and particularly for students from low-income, first-generation or minority backgrounds. More

As the Trump administration overhauls the student loan system, many borrowers pursuing Public Service Loan Forgiveness are worried about the program’s future.
“There’s a lot of panicking by PSLF borrowers due to the uncertainty,” said higher education expert Mark Kantrowitz.
Here’s what borrowers in the program need to know about recent changes affecting the program.

Students walk through the University of Texas at Austin on February 22, 2024 in Austin, Texas. 
Brandon Bell | Getty Images

As the Trump administration overhauls the student loan system, many borrowers pursuing the Public Service Loan Forgiveness program are worried about its future.
“There’s a lot of panicking by PSLF borrowers due to the uncertainty,” said higher education expert Mark Kantrowitz.

PSLF, which President George W. Bush signed into law in 2007, allows certain not-for-profit and government employees to have their federal student loans canceled after 10 years of payments.
Here’s what borrowers in the program need to know about recent changes affecting the program.

IDR repayment plan applications down

Some borrowers’ PSLF progress has stalled

While the legal challenges against SAVE were playing out, the Biden administration paused the payments for enrollees through a forbearance, as well as the accrual of any interest.
Unlike the payment pause during the pandemic, borrowers in this forbearance aren’t getting credit toward their required 120 payments for loan forgiveness under PSLF. It’s unclear when the forbearance will end.
But while the applications for other IDR plans remain unavailable, borrowers in SAVE are stuck on their timeline toward loan forgiveness, Kantrowitz said. If you were on an IDR plan other than SAVE, you will continue to get credit during this period if you’re making payments and working in eligible employment.
The Education Department is now tweaking the applications to make sure all their repayment plans comply with the new court order, an agency spokesperson told CNBC last week.
It will likely be months before the Department has reworked all the applications and made them available again, Kantrowitz said.
Those who switch to the Standard plan will continue to get PSLF credit, but the payments are often too high for those working in the public sector or for a nonprofit to afford, experts said.

‘Buy back’ opportunity can help

While it’s frustrating not to be inching toward loan forgiveness for the time being, an option down the road may help, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.
The Education Department’s Buyback opportunity lets people pay for certain months that didn’t count, if doing so brings them up to 120 qualifying payments.
For example, time spent in forbearances or deferments that suspended your progress can essentially be cashed in for qualifying payments.

The extra payment must total at least as much as what you have paid monthly under an IDR plan, according to Studentaid.gov.
Borrowers who’ve now been pursuing PSLF for 10 years or more should put in their buyback request sooner than later, Kantrowitz said.
“The benefit is likely to be eliminated by the Trump administration,” he said.

Keep records

Borrowers have already long complained of inaccurate payment counts under the PSLF program. While the student loan repayment options are tweaked, people could see more errors, Kantrowitz said.
“A borrower’s payment history and other student loan details are more likely to get corrupted during a transition,” he said.
As a result, he said, those pursuing PSLF should print out a copy of their payment history on StudentAid.gov.
“It would also be a good idea to create a spreadsheet showing all of the qualifying payments so they have their own count,” Kantrowitz said.
With the PSLF help tool, borrowers can search for a list of qualifying employers and access the employer certification form. Try to fill out this form at least once a year, Kantrowitz added. More

The U.S. Department of the Treasury on Sunday said it won’t enforce the penalties or fines associated with the “beneficial ownership information,” or BOI, reporting requirements.
Previously, the Treasury set a March 21 deadline for businesses to comply or risk fines of up to $10,000.
The Treasury will also propose regulation to apply the BOI rule only to foreign companies.

The US Treasury building in Washington, DC, US, on Monday, Jan. 27, 2025. 
Stefani Reynolds | Bloomberg | Getty Images

The U.S. Department of the Treasury on Sunday announced it won’t enforce the penalties or fines associated with the Biden-era “beneficial ownership information,” or BOI, reporting requirements for millions of domestic businesses. 
Enacted via the Corporate Transparency Act in 2021 to fight illicit finance and shell company formation, BOI reporting requires small businesses to identify who directly or indirectly owns or controls the company to the Treasury’s Financial Crimes Enforcement Network, known as FinCEN.

After previous court delays, the Treasury in late February set a March 21 deadline to comply or risk civil penalties of up to $591 a day, adjusted for inflation, or criminal fines of up to $10,000 and up to two years in prison. The reporting requirements could apply to roughly 32.6 million businesses, according to federal estimates.     
More from Personal Finance:Tax breaks, free college: How a Kansas town is enticing people to move thereSocial Security may see ‘interruption of benefits’ due to DOGE: ex-commissionerYou can still lower your 2024 tax bill or boost your refund with these moves 
The rule was enacted to “make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures,” according to FinCEN.

In addition to not enforcing BOI penalties and fines, the Treasury said it would issue a proposed regulation to apply the rule to foreign reporting companies only. 
President Donald Trump praised the news in a Truth Social post on Sunday night, describing the reporting rule as “outrageous and invasive” and “an absolute disaster” for small businesses.

Other experts say the Treasury’s decision could have ramifications for national security.
“This decision threatens to make the United States a magnet for foreign criminals, from drug cartels to fraudsters to terrorist organizations,” Scott Greytak, director of advocacy for the anticorruption organization Transparency International U.S., said in a statement.
— Greg Iacurci contributed to this article.

Don’t miss these insights from CNBC PRO More

Rent reporting services provide tenants the opportunity to grow their credit history through monthly payments.
However, landlords could also report late or unfulfilled payments to debt collectors.
Here’s what tenants need to know about how their rent can affect their credit.

Blonde woman standing in the room while unpacking boxes.
Miniseries | E+ | Getty Images

Rent payments don’t typically affect your credit — but they can in a few circumstances. The consequences can be significant.
Rent doesn’t show up in your credit history, experts say because landlords don’t usually report payments to credit bureaus as credit card issuers and other lenders do.

When rent payments do appear, it’s generally because a tenant — or a property manager on a tenant’s behalf — has enrolled in a so-called rent reporting program. These services are meant to provide tenants with the opportunity to grow their credit history through on-time rent payments.
“The good news is that there are a lot of them out there,” said Matt Schulz, chief credit analyst at LendingTree. “It’s certainly been a growing space over the last few years.”
If you fall behind, however, those services can also hurt your credit, experts say. And whether you report your rent to the bureaus or not, debt collection efforts for late or unfulfilled rent payments can also be a black mark on your credit.
The Consumer Financial Protection Bureau began accepting complaints about rental debt collection in August 2023. Since then, there have been roughly 10,960 consumer complaints about rental debt collection in the U.S., per CFPB data through Feb. 21.

If you’re a renter or plan to be, here’s what you should know. 

Rent reporting can help the ‘credit invisible’

Rent reporting can especially help those who are “credit invisible” or do not have any credit history. If you’re looking for ways to grow your credit, such platforms can be a helpful tool.
Those who have enrolled typically see their credit scores increase. When rent payments are included in credit reports, consumers see an average growth of 60 points to their credit score, according to a 2021 TransUnion report.
But if you fall behind on your rent payments, that activity could be also reflected in such tools, and in turn, your score, experts say.
What’s more, rent reporting services are not always free and do not always report the data to all three major credit bureaus, experts say. For example, rent reporting platform Rental Kharma charges $8.95 a month after an initial setup fee of $75. The service reports the data to two of the three bureaus: TransUnion and Equifax. 

How rent can appear as a debt collection

Even if you don’t use a rent reporting service, your landlord has the ability to report late or unpaid rents to the credit bureaus via a debt collection service, said Chi Chi Wu, a senior attorney at the National Consumer Law Center, a nonprofit headquartered in Boston. 
Rent delinquencies sometimes appear in credit reports if a tenant leaves a unit and the landlord claims the tenant owes back rent or damages, she said. The landlord in this situation will then send that amount to a debt collector.

The addition of any paid or unpaid collections tradeline — amounts of allegedly past-due accounts appearing on consumer credit reports — of at least $100 to a credit report will reduce a score of 680 by more than 40 points and a score of 780 by over 100 points, according to a 2014 report by the CFPB, citing the FICO 8 scoring model.
But the impact of a collection tradeline will depend on variable factors like your current score, the score model and even how recent the collection is, experts say. It could be less impactful once paid. 
“If the debt collection items are a few months old, that’s going to hurt a lot more than if it’s a few years old. It’s very variable,” Wu said.
Here are some key factors to keep in mind about how your track record as a tenant could affect your credit history, according to experts:

Rent reporting services

1. Do you actually need it? Check out if you would truly benefit from reporting your rent payments, Wu suggests. Experts point out that it’s more of an advantageous tool for those with weaker credit history. 
“It’s not the same value for everyone,” said Adam Rust, director of financial services at the Consumer Federation of America.
More from Personal Finance:Steps to student loan borrowers should take ‘immediately’What the privatization of Fannie Mae, Freddie Mac may mean for youFederal workers’ money questions answered
“For some people, their credit may already be good. So it won’t make much of a difference, whereas for others, particularly those who have no credit history or a thin file, it could be very important,” Rust said.
2. Does the service cost anything? Some rent reporting services are free of charge, others require a fee that can range from $6.95 to $9.95 a month, according to Apartment List. Some services charge a one-time enrollment or setup fee that can cost from $25 to $95, the site found. See if it would come at an additional cost to you or if your landlord covers any of the fees.
3. Does the service report to all three major bureaus? It makes sense to confirm that the rent reporting services report your payment history to all three credit bureaus, Schulz said. Sometimes the service will report to one or two of the bureaus, but not all three — which can mean a limited or uneven effect on your credit.
“It’s something that people don’t always think about,” he said.
4. What data does the service report? Some only share on-time, in-full rent payments to credit bureaus while others might include late-payment activity, experts say. And even if they only report positive history, if you’ve paid on time for eight consecutive months and all of a sudden the record is blank, future landlords and lenders might be able to connect the dots, Wu said.
Also remember that “life happens,” she said. “Look at all of these federal employees that are out of a job right now. They didn’t think they were going to be late on rent either, and they had secure jobs.”

Rental debt

Affected tenants may have inaccurate information reported to the credit bureaus. From August 2023 up until Feb. 21, there have been roughly 1,697 complaints about false statements or representation about debt collection related to rent, per CFPB data.
If you understand there is inaccurate or erroneous information on your credit report, you have the right to dispute that information under the Fair Credit Reporting Act, a law that governs credit reports, tenant screening reports and background checks, Wu said. 
“You have the right to dispute it,” she said. But keep in mind that it has been historically difficult to dispute reporting errors that involve debt collectors, Wu said. Creditors typically will take the side of the debt collector.

“It’s like a judge that always rules for the defendant or a referee that always makes the call for the home team,” she said. 
Even if you decide to ultimately pay the collection item on your credit report, with the exception of medical debt, it does not immediately go away, Wu said — it just appears as “paid.”
Under the provisions of the Fair Credit Reporting Act, adverse information like debt collections may remain on your credit report for seven years.
In 2022, the three credit bureaus announced voluntary changes to remove some medical debt from credit reports, which included paid off medical debt and unpaid debt under $500, Wu said. 
Outside of that, the item stays as a “ding” on your credit report even if you pay. 
“So paying it off might not solve the problem,” she said. One thing you could do is “pay-for-delete,” or pay the debt collector for them to kick the collection line off your credit in return, she said. If you decide to go through this route, make sure to get the agreement in writing, Wu said. You may want to consult legal experts about the idea.
Similar to your landlord — if you’re going to end your lease early, and you get the landlord’s “OK,” get the agreement and any details on your outstanding balance or obligations in writing. More