Affordable housing owners and operators face many sector-specific concerns. Chief among them is addressing the challenges faced by unbanked and underbanked populations.  

5.9M

Unbanked U.S. households¹

18.7M

Underbanked U.S. households¹

Because they don’t have a bank, credit union or enough payment history to establish a credit score, unbanked and underbanked renters may have difficulty securing housing.

“Unbanked and underbanked individuals rely on alternative financial services, so affordable housing operators need to think outside the box to best serve them,” said Moez Rajan, Treasury Management Officer in Community Development Banking at JPMorgan Chase. “With revised screening practices, innovative rent payment strategies and strong treasury infrastructure, operators can provide underbanked residents with housing and a financial path forward.”

Here are four ways affordable housing providers can better serve unbanked and underbanked residents. 

1. Rethink the screening process

When screening unbanked and underbanked applicants, you’ll want to look beyond traditional criteria. Instead, you should:

• Assess credit differently: Instead of focusing on past loan repayments to determine how likely an applicant is to pay rent, consider reviewing their rental payment history. You can also verify their income through pay stubs and obtain references from employers or previous landlords.
• Conduct personal interviews: These one-on-one interviews provide valuable insights beyond traditional credit assessments and can help you make more informed decisions.
• Request rental guarantors: For added financial security, you can ask unbanked or underbanked applicants for rental guarantors or cosigners. The guarantor agrees to cover rent payments if the resident defaults on their lease.

2. Encourage on-time rent payments

Affordable housing operators can sign up for rent credit reporting services, which help residents establish and improve their credit score when they make on-time rent payments. You can also encourage timely payments by offering:

• Multiple payment options: If you aren’t already, consider accepting money orders, prepaid debit cards, PayPal, Cash App and other electronic payments.
• Rent reminders: You can send residents regular reminders through text messages, emails, phone calls or written notices. Reminders should note the due date, payment options and any late fees.
• Payment assistance and resources: Make sure residents know where to turn if they’re unable to pay rent. Provide information on local rental assistance programs and organizations that offer financial counseling, rental subsidies and emergency funds.
• Personalized payment plans: Consider creating custom payment plans based on your renters’ financial situations. For example, you can set up biweekly or intramonthly payment schedules to align with a resident’s income cycle or establish a structured payment arrangement that suits their budget.
• Additional payment locations: Explore local payment services or community organizations that can provide options to underbanked and unbanked individuals. For example, you can set up payment kiosks or work with local businesses that can accept rent payments on your behalf. 

3. Support your finance teams

It’s important to have the infrastructure in place so your finance teams can help residents build credit while improving your operational efficiency. Focus on these four areas:

• Technology integration: Technology can help you reduce administrative costs and improve efficiency. For example, you can leverage property management software to automate rent payments and maintenance requests. Likewise, a treasury management system can help streamline cash management, bank reconciliation and financial reporting for larger companies.
• Vendor management and negotiations: Establishing strong vendor management practices can help ensure cost-effective procurement. Make sure to regularly review vendor contracts and negotiate favorable terms. You can also consolidate vendor relationships to leverage volume discounts.
• Cash flow optimization: Closely monitoring revenue collection and payment cycles can optimize your cash flow. For example, implementing cash forecasting, cash positioning, investment strategies and other cash management techniques can help you maximize available funds.
• Bank fee analysis and optimization: Explore fee structures, negotiate better terms and consider consolidating banking relationships with financial institutions that offer digital and automated solutions at a reasonable cost. 

4. Work with your financial institution to support residents

Financial institutions with affordable housing expertise can serve as valuable resources. Your bank can offer individual counseling or facilitate group workshops on budgeting, saving and how to establish and improve credit. Your financial institution can also help unbanked or underbanked residents open bank accounts, so they can receive direct deposits and send digital rent payments.

The bottom line

Implementing rent payment strategies and providing finance teams with support and infrastructure can help affordable housing providers address unbanked and underbanked residents’ challenges. By working collaboratively with an experienced financial institution, affordable housing providers can unlock new possibilities to meet the urgent needs of affordable housing.

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