Freddie Mac announced a new program to help renters build up their credit profiles and help make them more creditworthy. The initiative provides a means for owners or managers of multifamily properties to report on-time rental payments to the three major credit bureaus. The move aims to help a portion of the more than 45 million U.S. adults who have no credit score.

Less than 10% of renters currently see their on-time rental payment history reflected in their credit scores. That could be preventing some from accessing credit or qualifying for some of the best rates.

“Rent payments are often the single largest monthly line item in a family’s budget, but paying your rent on time does not show up in a credit report like a mortgage payment,” says Michael DeVito, CEO of Freddie Mac. “That puts the 44 million households who rent at a significant disadvantage when they seek financing for a home, a car, or even an education. While there remains more to do, this is a meaningful step in addressing this age-old problem.”

Freddie Mac’s initiative uses technology from Esusu Financial Inc. to allow multifamily operators to report on-time rental payment data from property management software platforms to the three credit bureaus. It will automatically unenroll renters when missed payments occur, which could then hamper credit profiles, Freddie Mac reports.

“At present, the most common way for rents to be reported to the credit bureaus is when there is a missed payment that has gone to a collections agency,” says Alexis Sofyanos, senior director of Equity in Multifamily Housing at Freddie Mac. “Freddie Mac wants to flip that script, so that renters who pay their rent on time and in full each month get credit for doing so, while also putting in safeguards for the most vulnerable.”

Freddie Mac announced it also will provide closing cost credits on multifamily loans for owners of rental properties who agree to report on-time rental payments through the Esusu platform.