When Wemimo Abbey and his mother first moved to the U.S. from Lagos, Nigeria, they were unable to get loans from banks in Minneapolis.
Without a credit score, they were forced to borrow money from a predatory lender with an interest rate over 400% percent. To pay back the lender, they had to borrow money from their church members and sell a precious ring that belonged to his late father.
The experience in 2009 inspired him to found Esusu with co-founder Sami Goel. The credit-building platform uses rent payment data to help people boost their credit scores.
" What keeps us going every day is this idea that … you should be able to get ahead, particularly for people of color and other low to medium income people that have been left out of the equation," Abbey said.
And now they have partnered with One United, South Florida’s only Black-owned bank to widen their impact in the region. Esusu takes rent payments and sends them to all three credit bureaus — Experian, Equifax, and TransUnion — helping to boost users' credit scores.
OneUnited Bank will make this rent reporting available to all customers nationwide, while Esusu will enable renters to access OneUnited Bank’s financial solutions through its app.
Teri Williams, president and chief operating officer of One United, said this is a much needed collaboration. The bank has a first-time home buyer program where they can give potential homeowners $25-$50,000 in down payment assistance — but they were having to turn down many due to bad credit, she said.
“ We had a lot of applicants for that, but we had to turn them down because their credit score is in the 400 range, the 500 range,” she said. “ It really makes a difference to have a good credit score when you're applying for a home loan.”
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As of 2021, about 58% of the Black community in the U.S. is renters, according to data from the Pew Research Center. It said black and Latino renters are disproportionately impacted by high rental costs, among other factors, and they're exposed to substandard housing conditions.
A 2022 Harvard study also found that people of color are more likely to be renters. The studies also found that an increasing number of renters in this demographic are in low-income households, which makes it difficult to build credit, which in turn makes it difficult to move from renting to home ownership.
Financial literacy
The name Esusu comes from the Yoruba people in Nigeria and describes a form of cooperation, where groups will pool money together in an informal savings account for their benefit.
“In the Yoruba culture, there is this idea that if you want to go fast, you go alone, but if you want to go far, we fundamentally need to go together,” said Abbey, the co-CEO of Esusu.
When you download the myEsusu app, you can link your bank account and report your on-time monthly rent payments.
Financial literacy is another core element of the partnership with OneUnited. A 2016 report from the Consumer Financial Protection Bureau reported that about 45 million people in the U.S. have a “thin file”: they do not have a credit score or any credit history.
“ Expenses have gone up dramatically while income has stagnated,” Abbey said. “What we are finding particularly is a systemic issue … there are lots of people that cannot participate in the American financial system."
Abbey laid out a couple of steps to guide those who aren’t sure how to build and maintain their credit:
- Keep your debt-to-credit ratio below 30%. If your ratio is too high, lenders might view you as a borrower who struggles to pay back loans.“ If you have a thousand dollars in a credit line, you want to keep your expenses below $300 because that affects one thing the credit bureaus care about,” Abbey said.
- Do your best to pay your expenses on time. “ If you are late and that's reported to the credit bureaus, it could stay on your credit for close to seven years,” Abbey said.”
”We are working on getting our community to actually believe that they can be homeowners and believe that they can improve their credit score,” Williams said. “A lot of times, either they have a thin file or not good credit, and they just don't know what to do in order to address it.”
For more information on the collaboration between OneUnited and Esusu, visit here. For more information on OneUnited and financial literacy, visit here.
