If you’re one of the many people currently renting a property, you may be missing out on some important information that can help you build your credit. In the past, only 1% of consumers had rent payments reflected on their credit reports while late payments and evictions were reported, ultimately hurting your score. Now, new services have the ability to report rental payments to credit bureaus. The question is, will this actually help you build your credit?
Since landlords and property management firms do not report rental payments, payment history will not be reflected on your credit report in order to positively affect your score. This does not mean that there is no other way though, as there are new online services that can list payments on your credit report through “rent reporting”. But, there’s a catch! This doesn’t guarantee your rental payment history will be included in your credit score calculation. Especially because only newer scoring models such as FICO 9, FICO XD, and VantageScore are including rent payments in your credit score, while most lenders are still using older credit scoring models, which unfortunately do not include rent payments. Bummer.
So let’s talk about what exactly a rent reporting service is. Basically, independent reporting agencies will gather information on your rent payments and report it to the credit bureaus on your behalf. A great benefit of doing this, is that it will provide future landlords with a successful documentation of on-time payments as usually all landlords prefer a candidate who pays on time. Two of the rent reporting services, Experian RentBureau and TransUnion SmartMove were designed for landlords performing background checks during the application process.
There are several services available, and each one has a fee and may not report to all bureaus. It’s important to do your research in order to find the one that’s best for you. Here are some of the common services available:
Rental Kharma submits your rental payment history to TransUnion and your landlord or property manager confirms payments each month through a quick and easy process. You can add 24 months of past rent payments to your credit report and build credit history and the average time to see results is two weeks.
Rent Reporters works directly with your landlord to confirm on-time rent payments over the last 24 months. You can also verify and report rent payments made to multiple landlords within the past 2 years. They report to TransUnion and anticipate reporting to both Experian and Equifax in the near future.
RentTrack reports to all three credit bureaus and even allows you to pay your rent online, in addition to setting up recurring payments.
Rent Reporting may not be for everyone so it’s important to ask yourself if the cost will be worth it. By adding rent payment history to your credit report, there’s no definite number of how much your score will increase by, or even a guarantee that it will. Future lenders may not even use a scoring model relevant to rent payments. On the other hand, a rent reporting service could help you demonstrate two years of on-time rent payments to potential landlords and payment history.