The Consumer Financial Protection Bureau (CFPB) today released a report warning that millions of renters and their families may suffer previously avoided economic harms of the COVID-19 pandemic as federal and state relief programs end. The report, “Financial conditions for renters before and during the COVID-19 Pandemic,” finds that some government relief efforts likely helped maintain the financial stability of renters and their families, suggesting that many may be at risk as those programs expire.

The report, which compared homeowners and renters, found that, on average, renters’ economic conditions were significantly more responsive to relief measures such as stimulus payments and changes in unemployment benefits. When these programs end, renters and their families may be at heightened risk. The findings in today’s report will help inform the CFPB’s ongoing work to support renters and their families.

“Today’s report confirms that renters, when compared to homeowners, are more likely to be Black or Hispanic, more likely to have lower incomes, and more likely to be women. They are also at particular risk of falling further behind as the nation recovers from the economic impacts of COVID,” said CFPB Acting Director Dave Uejio. “Past recessions and depressions have seen communities of color and low-income communities of all races and ethnicities left behind when the broader economy recovers. We cannot repeat that history. The CFPB is committed to helping renters and their families thrive. We must amplify and protect the modest gains renters made during the pandemic to ensure this nation’s full and equitable recovery from COVID-19.”

Using the CFPB’s Making Ends Meet survey and consumer credit data, CFPB researchers found that financial conditions faced by renters and homeowners were divergent before the pandemic, with renters generally experiencing more financial vulnerability than homeowners. Renters therefore had more to gain from some pandemic relief efforts than homeowners. They also could have more to lose from the termination of relief.

Comparing renters and homeowners, researchers found:

• Compared to homeowners, renters are more likely to be Black or Hispanic, are younger, and have lower incomes. Prior to the pandemic, average credit scores among renters were 86 points lower than those of homeowners with a mortgage, and 106 points lower than those homeowners who reported paying no mortgage. Renters’ Financial Well-Being Scores were nearly 8 points lower than those of homeowners with a mortgage, and more than 13 points lower than homeowners who reported paying no mortgage.
• Renters’ debt obligations also differed considerably from those of homeowners before the pandemic. In June 2019, renters were more likely than homeowners to have student debt and to have used some form of alternative financial service, such as payday, pawn shop, or auto-title loans.
• During the pandemic, despite poor labor market conditions, renters’ financial conditions, on average, appeared to improve as much as, or more than, those of homeowners. Renters’ credit scores grew by 16 points during the pandemic, compared to 10 points for mortgagors and 7 points for other homeowners, for example. However, renters’ credit scores, though improved, remained substantially below those of homeowners, even accounting for the modest improvements of renters’ credit scores.
• Renters’ financial conditions throughout the pandemic have been more responsive to changes in government financial assistance than those of homeowners. Delinquency, credit card use, and credit card debt among renters rose and fell in conjunction with stimulus payments and changes in federal unemployment benefits, while homeowners’ delinquency, credit card use, and credit card debt remained comparatively stable.
• Among renters, some credit outcomes among groups who qualified for targeted pandemic relief appeared to be more responsive to policy changes than those among other groups. For example, credit scores among renters with student debt leapt 40 points during the first months of the pandemic. Additionally, delinquency rates among renters with children saw a considerable decline following stimulus payments during the pandemic (dropping from 42.1% to 34.4%), perhaps reflecting that stimulus payments could be larger depending on the presence of children in the family.

As government pandemic financial supports end, renters are in danger of falling further behind the broader national recovery. Renters represent over 30% of U.S. households, and their welfare is critical to the welfare of the larger economy and the communities in which we live.

As part of its work to support an equitable economic recovery, the CFPB has reminded credit reporting agencies and furnishers of their obligations to report rent payments and evictions accurately. Accurate reporting is now even more essential with the new mortgage underwriting process announced by Fannie Mae last week, which will add rental payments to the evaluation process for mortgage qualification and approval. The CFPB will use today’s report to inform how best to support an equitable recovery for renters and all Americans.

Read the CFPB’s full report, “Financial conditions for renters before and during the COVID-19 Pandemic.”