According to a December 2016 study produced by the Consumer Financial Protection Bureau (CFPB), an estimated 26 million people in the U.S. don’t have credit histories with any of the three national credit reporting companies. Less than three months ago, Leonard Dew, 46, was among them.
“I had never in my life used credit,” said Dew, an auto mechanic who owns a body shop. “When I was younger, I had child support to pay and once they run your credit and see you got child support nobody wants anything to do with you. So I always paid cash — for everything.”
Two months ago, Dew overheard West Side businessman Marseil Jackson, 29, talking to a mutual friend of theirs about a new company Jackson had started called Rental Harvest, which allows renters to build their credit histories by applying the past two years of rent payments to their credit reports. In order to apply for the service, landlords or property managers are required to verify the rental payments.
For a one-time reporting fee of $99.95 and an additional $14.95 a month for a monthly subscription — which entails the company reporting ongoing rental payments and offering assistance with resolving past rental issues — Dew might be able to come into the light at last.
Initially, he said, the prospect sounded too good to believe. But as with many of Jackson’s clients, the serial entrepreneur’s pedigree allowed Dew to take a leap of faith. The mechanic and father of three adults said so far it has been worth the risk.
“My credit went from zero to 699,” he said. “I’m getting older. I got three kids who graduated from college — one’s a lawyer and the others are probation officers. I want to start living now and establish some credit.”
Jackson is helping Dew turn his fresh credit score into more opportunities. When new customers sign up, Jackson said, they can also benefit from the company’s range of subsidiary services, such as regular financial literacy workshops, among other forms of continuing support and consultation.
“Leonard owns a body shop and now he’s interested in opening up a car dealership,” Jackson said. “I’ve been connecting him with people I know to help him get it done.”
Dew spoke about his past one afternoon late last month, on the other end of Jackson’s speaker phone, as Jackson sat at a large wooden conference table inside of the expansive office of his business partner, Eric Strickland.
Jackson and Strickland occupy a large office suite within a building that was once part of the former Sears, Roebuck and Company Complex in North Lawndale. On one end, Jackson focuses on building credit and on the other, Strickland focuses on returning this once-famous part of Homan Square back to its former glory.
“Rent is the largest portion of what people spend every month of their lives and to be able to utilize that source as a tool to build credit just made economic sense to me,” said Strickland, the former executive director of the Lawndale Business and Local Development Corporation.
Strickland, an economic development consultant who had a major role in the development of the Lofts on Arthington — a 181-apartment complex across the street from his office — said he’s also working with Jackson to develop a national audience for Rental Harvest.
“The name is biblical,” Jackson said. “When I was coming up with a name for the company, I thought about how we sow seeds every month paying our rent, but we don’t receive a harvest for it. The Bible talks about seed time and harvest. We help our customers reap a harvest when they sow that rental seed each month.”
Eyeing an opportunity
Jackson has been able to alleviate the natural skepticism of many would-be clients by the sheer force of his storied past. He’s been self-employed since he was 15 years old, when he started his first business, an online retail store called Off the Radar Discount. At 16, he attracted his first investor, a New York attorney, who gave him $10,000 for one of his ideas.
Christian Lewis, 35, is Jackson’s insurance broker and a Rental Harvest customer. Lewis said his credit score jumped from 512 to 674 after his rental payments were applied to his credit history.
“When I first heard Marseil tell me about the idea, I absolutely believed it. I had no doubt,” Lewis said as he stood in Jackson’s North Lawndale office, waiting to star in a promotional video that Jackson’s team was shooting.
“There are a few people who, when you talk to them, you kind of have to do background checks,” Lewis added. “I don’t believe [Jackson] would be able to do business for as long as he has in Chicago if he wasn’t [upstanding].”
Ditto for Darnell Harmon and Fabian Smith.
Harmon, 51, is a West Side insurance broker whose score jumped from somewhere in the mid-500s to 620 within three weeks. He said he plans on using his increased credit score to purchase a building and refinance his car.
“I was skeptical about it at first because a lot of people have scams, but since I knew Marseil really well, I was willing to give him a try,” Harmon said. “I’ve even told other people about this.”
Smith said his credit jumped from the low 600s to 771. He’s now looking at buying a three-flat on the West Side and has been approved for low-interest credit cards. He’s also looking to start his own trucking company.
“Everybody is skeptical, considering all of the scams and the people who’ve been ripped off these days, but the person who referred me to Marseil is a decent person,” Smith said. “When she referred me, I was sold.”
Jackson describes himself as a serial entrepreneur (“I start a business. I sell it. I start another one. If one fails, I shut it down.”).
“But this,” he said, referring to Rental Harvest. “This is it.”
Jackson said he got the idea for Rental Harvest after reading a newspaper article that alerted him to the fact that, since 2011, the three national credit bureaus—Equifax, Experian and Transunion—have been integrating rental history into credit score reports.
According to a March 2015 Los Angeles Times report, Experian — the first major credit bureau to apply rent payments to credit histories — completed a study two years ago that sampled 20,000 tenants living in government-subsidized apartments.
When rent payments were applied to those tenants’ credit histories, Experian discovered, 100 percent of them went from “unscoreable” to “scoreable” and 97 percent “had scores in the ‘prime’ (average 688) and ‘non-prime’ (average 649) categories,'” the L.A. Times reported.
Jackson found that the incorporation of alternative data sources, such as rent payments, into factoring credit scores could be a boon to residents in places like the West and South sides of Chicago, where the “credit invisibles” and “credit unscoreables” (people whose credit files are thin, insufficient or stale) are concentrated.
According to the CFPB study, of “the consumers who live in low-income neighborhoods, almost 30 percent are credit invisible and an additional 15 percent have records that are unscoreable.”
“A lot of the issues in our community are economic issues,” Jackson said. “Without credit, you can’t do a whole lot.”
But when he approached the credit bureaus with a pitch to setup his own rent reporting service, he was initially denied without explanation, Jackson said.
“So I fought and fought and fought until I got approved in January,” he added. “Before they approved me, they sent somebody out to inspect my office to make sure the computers are locked and the file cabinets have keys to them and that multiple businesses aren’t sharing the same room. They want to make sure that you’re legit and have a secure space. This is sensitive data we’re dealing with.”
Jackson persuaded his father, Derek Jackson, 55, to invest in the expensive software necessary to run the business.
“It was a no-brainer for me,” Derek said. “I figured if we marketed it right and put it out there the right way, the business would grow and make money. It’s working right now.”
Jackson said that he has nearly 350 clients so far, a number he said is growing so rapidly he may eventually need to court a team of investors to finance more capital purchases and hire more people to his team of seven employees — most of whom are part-time.
Recently, Rental Harvest was selected by the Illinois Black Chamber of Commerce as the 2017 New Business of the Year. Jackson said the chamber has agreed to help the company acquire new customers in Central Illinois, where the chamber is headquartered.
Since the credit bureaus have started integrating rental payments into credit histories, a small crop of larger companies, such as RentTrack and ClearNow, have materialized to take advantage of the new development. Jackson said he differs from these players in that Rental Harvest doesn’t process rent payments, it simply reports the data to Transunion.
By their account, he and Strickland said, Rental Harvest is the first and, so far, only African American-owned rent reporting service in the country — which, they added, is also their competitive advantage.
“We’re about making money,” said Jackson, “but we’re also about giving back to the community and hiring from the community and meeting the community’s needs.”