Rent Reporting: Boost Your Credit Score by Reporting Rent Payments

Timely payments are the most important factor of your credit score, accounting for a full 35% of your score. While mortgage payments, car loans, and credit cards are all reported in this section, a huge missing component is rent.

Unfortunately, the three major credit bureaus do not have a section for rent payments, and only 1% of consumers have this information reflected on their credit reports.

To make matters worse, late payments and evictions are reported, so really, renting has traditionally only had the ability to hurt your credit, not help it.

However, new services have recently begun to report rent payments to one or more credit bureaus. But, does this payment information help you build your credit?

In some cases, the answer is yes. Learn everything you need to know about building your credit with rent so you can take action quickly and effectively.

Does paying rent build credit?

Landlords and property management companies do not report rent payments to the three major credit bureaus. So there’s no way for an ongoing payment history to positively affect your credit history.

However, several new online rent reporting services offer to report rent payments to get them listed on your credit reports.

Experian RentBureau collects rental payment data for your credit report, while TransUnion lists the information directly onto your credit report. The catch, though, is that just because the data is there doesn’t mean it’s included in your credit score calculation.

Some Credit Scoring Models Already Include Rent Payments

Newer scoring models, such as FICO 9, FICO XD, and VantageScore do include reported rent payments in your credit score. The problem is that most lenders don’t currently use the newest scoring models; FICO 8 is still one of the most common models for lenders.

While some lenders will happily use reported rent payments, most prefer to use more traditional lending standards.

Some rental reporting companies help customers find credit card offers from companies who do consider rental history.

If you’re trying to improve your credit scores, responsibly using a secured credit card is an excellent way to build up payment history on an account used in all credit scoring calculations. Just be sure not to accumulate tons of debt because you’ll inadvertently end up damaging your credit history even more.

What is a rent reporting service?

Individuals can’t report rent payments to credit bureaus on their own, and landlords seldom do. Instead, independent reporting agencies gather information and report it to the credit bureaus on your behalf.

Another benefit of using a rent reporting agency is securing a future rental property. All landlords much prefer candidates with a history of on-time rental payments, and this is an easy way to document your success.

Experian RentBureau and TransUnion SmartMove are explicitly designed for landlords performing background checks during the application process.

Rent Reporting Services

There are countless rent reporting services that report your rental payment data to the credit bureaus. Each one has separate fees, and some may only report rent payments to one or two credit bureaus. Still, others may require your landlord or property manager to sign up for the service. Take the time to do a bit of research on each one and then select the right option for you.

Is rent reporting right for you?

You have to ask yourself if the cost is worth the gain. There’s no way to predict exactly how much your credit scores will jump because of rent payments added to your credit report. Plus, future lenders might not even use a scoring model relevant to rent payments.

Still, if you’re looking for every point possible on your credit score, then a rent reporting service could be a big help, especially if you choose one that allows you to verify two years of rent payments because you’ll see a much larger boost.

Fees & Rewards

Just make sure you fully understand all the fees associated with it and the company’s commitment to customer satisfaction. If you have a credit card, the cost of transaction fees might be offset if you’re enrolled in a strong rewards points program.

Just think — if your month is $1,000 each month, that would be an extra $12,000 worth of points you accumulate each year. Do the math and see if that outweighs the cost of the service.

Building your credit is an ongoing process, not a single action you take just one time. In addition to paying your rent on time, make sure you’re also addressing your other bills because they carry just as much weight, if not more.

Credit cards, cell phone bills, and utilities all need to be paid on time too. Pair that with paying down your existing debt, and you’ll watch your credit score continue to rise over time.