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Using Your Rent Payments To Boost Your Credit Score

Even though more Americans own than rent, paying rent is a monthly action performed by more than 100 million Americans every year. These monthly payments must affect your credit score, right? Surprisingly, the answer is far more nuanced than it would seem.

Credit bureaus didn’t include rent as a positive influence in your score until 2011, and the trend is only gathering steam in the recent past. The fact that it’s gaining popularity is incredible news, especially for people who want to boost their score, fast.

Tools like Rent Reporters have been created to help you rebuild your credit; opening you up to the possibilities of becoming a homeowner, achieving lower interest rates and gaining approval for loans, to name a few. Moreover, this tool can boost your score by an average of 35-50 points in as little as 15 days! Let’s dig into details of how this new line of credit can help improve your
score.

Why Is Rental Payment Reporting Important To My Score?

If you already have a great credit score, adding a line for rental payments to your report may not be worth your while. However, if you’re looking for a quick solution to improve your score, and continue improving it over time, it makes sense. Studies show that people with a score of 650 or below benefit the most from rental payment reporting. Another study revealed that 100% of people who were previously unscorable due to not having a credit history were able to begin building credit by reporting their rental payments. This is a massive feat, considering that you need credit to build credit, but may not be in a position to build credit in traditional ways.

How Do Major Bureaus Help Me Include Rental Payments On My Credit Score?

Landlords are not required to report rental payments to credit bureaus. However, some major credit bureaus have begun developing online services to collect and include your rental payment history in your scores. A good example of this is Experian RentBureau, the first major credit bureau to incorporate positive rental payments into the equation. The catch is that your landlord has to work with this company, and your score will only be reflected by Experian, one of the three major credit bureaus. Another example is Resident Credit from Transunion, but this service is only available with companies that own 100 or more properties. While these are great first steps, because landlords aren’t required to report your rent, and because many small companies and individual landlords exist, not enough renters are being positively affected by these new models. That’s why newer services like Rent Reporters are so important.

How Does Rental Payment Reporting Work?

Historically, rental payments have not been reported to the main credit bureaus. In fact, only 1% of renters have their payments reflected on their credit reports to this day. Amazingly, late payments and evictions are reported, which feels unbalanced. Luckily, services have stepped in to even the score, literally.

How Do Major Bureaus Help Me Include Rental Payments On My Credit Score?

Landlords are not required to report rental payments to credit bureaus. However, some major credit bureaus have begun developing online services to collect and include your rental payment history in your scores. A good example of this is Experian RentBureau , the first major credit bureau to incorporate positive rental payments into the equation. The catch is that your landlord has to work with this company, and your score will only be reflected by Experian, one of the three major credit bureaus. Another example is ResidentCredit from Transunion, but this service is only available with companies that own 100 or more properties. While these are great first steps, because landlords aren’t required to report your rent, and because many small companies and individual landlords exist, not enough renters are being positively affected by these new models. That’s why newer services like Rent Reporters are so important.

How Do Rental Services Like Rent Reporters Work?

While some landlords use online payment systems that allow rent payments via credit cards, these services aren’t widely used. Far more popular is the trend of paying individual reporting agencies to gather your rental history information and report it to credit bureaus on your behalf. Essentially, they do all of the hard work by contacting and onboarding your landlord to their service, ensuring a partnership is in place even after you’ve signed a lease.

How Do I Know If Rental Services Report To All Three Major Credit Bureaus?

Once joined, your rental information is then automatically submitted directly to either one, or a mix of, the three major credit bureaus (Equifax, Experian and TransUnion). Ideally, the service reports to as many bureaus as possible, because the major bureaus do not share information with each other. This can be a problematic if your rental service reports to TransUnion, for example, but your bank pulls your credit score from Equifax. If this is the case, your rent payments won’t appear on your credit score. Make sure to thoroughly research each service to ensure your score will actually be reflected on your credit report.

The Advantages of Rent Reporters

Rent Reporters initially only reported to TransUnion. When applying for a mortgage this detail is inconsequential because mortgage brokers use a Tri-Merge Credit Report. This means they pull rental history payment data from all three major credit bureaus and combine them into a single report and score. Unfortunately, this is only helpful if you plan to apply for a mortgage and stop renting. As of January 1st, 2019, Rent Reporters will report to both TransUnion and Equifax, which positions them as one of the few services who reports to multiple major credit bureaus. Furthermore, the undeniable advantage of Rent Reporters is that they backdate and report 24
months of your rental history to these major rental bureaus. They are the only rental service to do this and it significantly increases the chances of your rental payments being included in your credit score. How Does Reporting 24 Months of Rent Payment History Help Me? If you have a positive rental payment history, it seems unfair that this data is not reflected in your credit score. That’s why Rental Reporters chooses to include it in your reports, giving you a chance to boost your credit score by 35-50 points in as little as 10 days. This colossal increase can be the break you’ve been waiting for. If you’ve been denied a loan, or been forced to pay high interest rates because of a poor score, this tool can help you get back on track.

Conclusion

The recent creation of rental reporting tools and services can legitimately impact your credit score for the better. Since paying rent is something that at least ⅓ of Americans do, it’s nonsensical that this monthly action can negatively, but not positively, impact your score. While major credit bureaus are working to create platforms to include rental payments in their scores, independent rental services work directly with landlords of any size to help you add this line of data to your reports. Rental Reporters is the only service that allows you to backdate your rental payment history, making it unique and ahead of the game.