Many credit scoring models will consider rent payments, but only if they are reported to the credit bureaus. But most landlords don’t report. You can pay a rent reporting service to put your payments on your credit history, but it may not be the most economical way to build credit.
There are also some credit cards, like Bilt, that allow you to pay rent on them, but you need a good credit score (670-850) to qualify.
How Do Rent Payments Appear On My Credit Report?
Everything on your credit report has been reported by a lender or creditor to one or more of the three major credit bureaus: Experian, Equifax, and TransUnion. Your rent payments will only appear on your credit report if they are reported by your landlord or a rent reporting service.
Lenders pay to report, and if they report they are subject to regulation under the Fair Credit Reporting Act (FCRA). Most landlords don’t want to deal with that, so they don’t report your payments. That means your largest recurring payment isn’t helping your credit score.
There are several ways to put your rent payments on your credit report. All of them have advantages and disadvantages. You may choose to use one of them, or you may decide to focus on other ways to build credit.
How to Get Your Rent Payments Reported to Credit Bureaus
Choose a Landlord That Reports
Some large corporate property managers do report rental payments. Even some smaller landlords are now using rent reporting services like Experian RentBureau as a perk to attract high-quality renters.
If you’re shopping for an apartment lease, it’s worth asking potential landlords if they report rent payments. It’s even worth asking your current landlord if they’d consider it. It’s worth a try, but there is no assurance of success.
If your landlord is reporting your payments, a late rent payment can hurt your credit. Always pay on time.
Use a Rent Reporting Service
Rent reporting services will report your rent payments to the credit bureaus for a fee. Some will report up to 24 months of past rent payments.
There are some disadvantages to rent reporting services.
- They cost money. You can expect to pay $100 to $200 for a signup fee, a year’s service, and 24 months of past rent payment reporting.
- They may not report to all three credit bureaus. Many rent reporting services report to only one or two credit bureaus, thus cutting the impact on your credit history.
- There may be restrictions on your payments. Some services require you to pay through an automatic deduction from your bank account, or you may have to pay your rent early.
If you are shopping for a rent reporting service, Rent Report Team and Esusu Rent report to multiple credit bureaus. Boom is a new app that lets you pay rent online, offers installments, and reports to Experian, Equifax, and TransUnion!
How Does Not Paying Rent Affect Your Credit?
Paying rent can only affect your credit score if your rental payment history is reported to the credit bureaus. That probably won’t happen unless you take action to make it happen.
Not paying rent can hurt your credit, even if your landlord doesn’t report. Your landlord may sell your account to a collection agency. Collection agencies will then report the account. Collection accounts do serious damage to your credit.
An eviction record will not appear on your credit report, but future landlords or other lenders will find out about it through public record searches or tenant-specific reporting bureaus.
Of course if you refuse to pay rent and you get evicted, your eviction record will appear on your credit report. And that will definitely ruin your credit.
Other Ways to Build Credit
Building better credit requires strategy. It’s not just about putting a single new tradeline on your credit report. You’ll have several options. Each will have advantages, disadvantages, and potential costs or risks. It’s all about choosing the right options for your situation.
Putting rent payments on your credit report is one of those options. It may or may not be the best option for you. Let’s look at some other possibilities.
Use Credit Strong
A credit-builder loan from Credit Strong is a fast, efficient, and affordable way to place an installment credit account on your credit report. Consider the advantages:
- No credit check. Credit Strong credit builder loans are available to borrowers with no credit score or poor credit.
- Small monthly payments make it easy to build a good payment history.
- Reports to all three credit bureaus for maximum impact on your score.
- Free credit score from TransUnion helps you monitor your gains.
- Helps you save. Your accumulated payments will be released to you, minus interest, when the loan is paid.
If you’re looking for accessible, inexpensive ways to build credit, check Credit Strong today! You’ll need a checking account, debit card or prepaid card, mobile phone number, email address, and a Social Security number, but not much more!
Apply For a Secured Credit Card
To build good credit, you’ll need both installment credit and revolving credit. A secured credit card will fill the revolving credit niche.
Secured credit cards are available to people with no credit score or poor credit. You’ll pay a deposit, and that will become your credit limit. After that, your secured card will work just like any other credit card.
A secured credit card can help your credit, but you’ll need to use it wisely. Establish a good payment history and keep your credit card balance below 10% of your limit and you’ll help your credit. If you make late payments or max out your card, you’ll damage your credit.
Pay Off Debt
Paying off debt can help your credit score. If you have large credit card debts, paying them off will help reduce your credit utilization ratio (the percentage of your available credit that you use), a major factor in computing your credit score. You’ll also save money on interest!
Reducing your debt load will also reduce your debt to income ratio or DTI. This won’t affect your credit score, but a low DTI can help you get approved and get better terms, especially for large loans like a car loan or mortgage.
If you have an installment loan – like a personal loan, car loan, or student loan – paying it off early may not help your credit score. You could even hurt your credit, as you’ll have fewer active accounts and the average age of your open accounts could be reduced.
Pay off debts with higher interest rates first!
Make On-Time Payments Each Month
Payment history is the single most important component of your credit score. If building credit is a priority, your first step will be to make every debt payment on time, every month.
Avoid making minimum payments on your credit cards. A minimum payment will keep you in good standing a little longer, but your balance will pile up, your credit utilization will go up, and your interest costs will rise. That makes it more likely that you’ll miss payments down the line.
If you’re going to be late on a payment, call the creditor and ask to set up a payment schedule. Pay what you can upfront and catch up as soon as you can. Many creditors will hold off on reporting a delinquent account if you make contact with them and explain the situation.
Conclusion
You can use rent payments to build credit. If you can’t find a landlord that will report your payments, a rent reporting service can do the job and add up to 24 months of back payments as well. Whether it’s worth the cost is something you’ll need to decide.
It is not possible to predict how much a rent reporting service can add to your credit score. If you have a thin credit file with a small number of accounts, the impact could be large. If you have an extensive credit history, you may not even notice the difference.
Building a good credit score is not just about adding every possible account to your credit record. You’ll need a plan.
Review your credit situation and see what’s holding you back. Consider all options for improving your existing record and adding new accounts. Focus on the credit-building products and techniques that will deliver the most impact for the least cost and effort.
You can build a better credit score. Many people have done it, and so can you. Consider all your options, choose the ones that fit you best, and using them wisely will make it easier!
CreditStrong helps improve your credit and can positively impact the factors that determine 90% of your FICO score.
