Nov 11, 2022 Esusu: A Case Study in Optimizing Social Impact Programs
Reprinted with permission by Kairos Investment Management Company
Resident social impact programs can be an excellent way for affordable multifamily property owners to layer in additional benefits for those who need them most.
For Kairos, social impact programming at our affordable housing communities means impacting our residents’ lives in a meaningful and positive way. The added benefit is that by helping our residents improve their own lives—whether through programs that provide lunches to their children or administering access to flu shots—we can also boost property performance in our portfolio.
Although they can often be difficult to quantify, in some cases the benefits of social impact programs are measurable. This is the case with one of our newest social impact programs, a partnership with Esusu which was built to create equitable financial access for everyone. The program has had tangible outcomes for both residents and Kairos that extend far beyond offering a good or service.
Let’s examine this program and how it has impacted residents at our properties.
How the Esusu Partnership Works
Rent payments are typically not submitted to be recognized by credit reporting agencies, in fact, less than 10% of rental households currently report their payments. Esusu recognized this as an opportunity to help elevate affordable housing residents.
Through the program, when residents pay their rent on time at one of our participating properties, Esusu reports these payments to three major credit bureaus: Equifax, TransUnion, and Experian. The goal is to help renters build and improve their credit scores and assist property managers with maximizing returns at our properties.
The Esusu program is designed to help residents at all points along the credit score spectrum. Some people might be working to increase their score, while others may even be starting from scratch with no score. Additionally, Esusu offers access to a rent relief program to residents experiencing financial hardship, providing them with the option to apply for interest-free, no-fee loans covering up to three months of rent payments.
How Many Residents Could Benefit?
Over 45 million people living in the U.S. are currently credit “unscoreable,” with renters, immigrants, and minorities making up the majority of those without credit or with credit thin profiles. And, according to Experian and based on data from the Consumer Financial Protection Bureau, roughly 26 million Americans, or about 11% of adults, are “credit invisible,” meaning they have no credit history on file with these national credit bureaus.
Kairos has seen firsthand how much a person’s credit score can affect their success in life and, when properly influenced and accounted for, how it can snowball into a series of positive effects. In fact, we have specific data on how this program has already impacted nearly 4,000 residents at seven of our affordable housing communities. As part of the program’s long-term vision, the Esusu team is working alongside Freddie Mac to offer this service to 19 affordable housing communities within Kairos’ portfolio. The Esusu team will also work with Kairos to extend this service to an additional seven communities.
Results Achieved So Far Alongside Esusu
During the first six months of our credit reporting program in partnership with Esusu:
69% of participating renters have seen their scores improve and 749 new credit scores have been established. Additionally, the percentage of enrolled residents reporting a poor credit score, with scores ranging from 300 to 600, decreased from nearly 42.2% to roughly 27.8%, a 34.1% improvement.
Turning a poor credit rating into one that is considered good, or even fair, can open a window of opportunities for residents, such as being selected for housing, paying lower utility deposits or monthly car payments, and qualifying for a loan. The average credit score of participating renters has increased in the last six months from 626 to 652!
In addition to improving residents’ credit scores through this social program, we believe providing them with general credit education can be a powerful investment toward helping them to continue improving and maintaining their score in the future.
Amid a national affordable housing crisis and during the third year of a global pandemic, it is more critical than ever to build upon and innovate with social impact programs such as these. Delivering a tangible impact for our residents, based on their needs, remains of top priority as Kairos continues to grow this partnership in our affordable housing communities across the U.S.
*The research data discussed in this case study is courtesy of Esusu and is meant for educational and informational purposes only. The views and opinions expressed in this article are solely my own.
For questions or comments, contact our general information department at info@kimc.com.
