August 20, 2018
August 20, 2018
Starting July 1st 2018, poor credit score and financial history will have less influence on applicant’s eligibility of affordable housing.
The previous process for affordable housing applications was quite laborious for housing project owners and applicants. Upon request, applicants need to provide pay stubs, tax returns bank statement and any other documentation required to understand years of financial, housing and employment information. Since it takes a considerable time and energy to request and review all documents, owners can waste months before they can rent a unit to an eligible applicant. On the other hand, applicants often suffer from poor credit score and insufficient financial history.
According to a study published by the Department of Housing Preservation and Development in 2017, credit history creates many problems in determining affordable housing eligibility, because of its negative impact on program’s targeted audience. The report says approximately 30 percent of people applying had limited or no credit history. Certain groups such as young people and recent immigrants, who have high needs for affordable housing, may not have established credit histories to qualify.
A recent article by 6SQFT outlined some of the ways credit history is used in the housing lottery process. First, owners may only use credit scores as an indicator of financial stability. Owners can choose to accept all applicants with a 580 or higher FICO score. Other restrictions apply if they want to reject applicants with lower scores. Owners can also determine eligibility using only history of evictions and bankruptcies and disregard credit scores.
Also, FICO score cut off line is 500 if the applicant is currently homeless, with a 12-month look-back limit on bankruptcy. Owners can only consider landlord-tenant actions that took place over the past 24 months.
Are you a building owner and still have questions on the lottery process? Contact us for advice from HPD certified marketing specialists.
Are you an applicant and not sure if you are eligible? Check out Rentability by City5 to see currently available housing projects and if you qualify.