MEDICI now! Startup Stories highlights the companies that are shaping the new financial technology industry. Keep an eye out each week for new stories! If you or someone you know should be highlighted, send us a note. Without further ado…
Name/Title: John Simpson/CEO
Industry Segment(s): PFM, Lending
Target Markets(s): USA
LTP Team: Tell us a little bit about yourself.
John Simpson: I initially joined RentReporters in 2013 as an investor and board member. Compelled by the opportunity to provide our country’s 100 million renters, and particularly the 45 million who are unscorable and/or credit-invisible, with the ability to improve or establish credit by paying their rent on time – I expanded my role in 2016 to become CEO. My passion for innovation in the financial space began at Deloitte, where I became a partner after six years. I then started a technology-driven tax credit screening firm called CCG. After that, I co-founded HigherUp, an HR analytic solutions firm to empower small businesses. My wife and I have three kids ages 16, 14 and 12.
LTP Team: Give us a paragraph pitch of your company.
JS: RentReporters is a leading rental history reporting company helping to redefine the calculation of credit scores in a way that reflects modern economic life for the 100M renters in the US. By including what is the single largest expense each month – rent payments – in the calculation of credit scores, RentReporters helps people qualify for access to the financial options they have earned and deserve.
LTP Team: In a sentence or two, what problem are you solving today?
JS: RentReporters enables renters with no or low credit scores, as well as those who already have good or excellent scores—to proactively impact these scores simply by having their monthly rent payments automatically reported to TransUnion. With a higher credit score that more accurately reflects their responsible financial behavior over time, they can qualify and have access to credit at better rates and terms – perhaps enabling them to buy a car for the first time, receive a credit card with a competitive APR, or buy their first home.
LTP Team: Who are you selling to?
JS: Renters who want to establish or improve their credit scores.
LTP Team: Why did you start the company?
JS: RentReporters was started to provide renters with a path to the financial opportunities they deserve by enabling consumers to proactively impact their credit score simply by having their (on time) monthly rent payments reported to the major credit bureaus.
With the increasing growth of renter vs. owner occupied household since 2008, rent payment history needs to be an important part of the credit bureau rating algorithms. The payment of monthly rent is highly correlated with ability and timeliness of debt payment in general, and hence this data should be as important as historically accepted sources such as mortgage and car loan payments in calculating scores.
LTP Team: What's the most important change coming to your segment in the next 3–5 years?
JS: There is a growing consensus that rental history reporting should be considered to reformulate credit scores. As you know, monthly rent payments are highly correlated with the ability to repay debt in a timely manner, yet they have not been one of the historically accepted data sources for calculating credit scores. The Consumer Financial Protection Bureau recently put an inquiry out seeking feedback from the financial industry and the public about using alternative data such as rent payments to formulate credit scores.
Other changes are also coming about from new financial technology tools, platforms and services that are free or low cost that allow more individuals to improve their own financial health and destiny.
LTP Team: What’s your next milestone?
JS: In the next two years, we hope to provide millions of renters with access to optimized credit that more accurately reflects their financial responsibility.
LTP Team: Anything else you want to say to our audience?
JS: RentReporters has a fundamentally different perspective on consumer credit than those businesses in the world of payday loans, subprime credit and predatory lending products. If you have earned access to credit through your financially responsible behavior, you should get it. But we also believe that people should also have the knowledge on how best to use that credit score, keep it, and grow it. RentReporters doesn't provide the credit but helps your credit score (the path to getting credit) reflect your consistently responsible financial actions and behaviors.
Bonus – User’s Choice Question!
LTP Team: If you could change one thing that financial services people do incorrectly, what would that be?
JS: I’m very passionate about making great use of credit and minimizing the costs of credit. Regardless of the level of formal education achieved, we seem to exist in a world where a low financial IQ is commonplace. Early and ongoing financial education is very important if we are to enable the general population to move to a practice of higher savings and credit scores throughout their lives. Lots of resources are available so I really encourage learning and training needs to be about the best practices of when to borrow, how much, and under what conditions.
For more information, visit www.rentreporters.com.