Did you know that rent payments can positively change a credit score when they are reported to a credit bureau? Excited by this prospect? So are we.
There are several different ways for renters to report rent payments. Some options are free while others cost money and some require involvement from a landlord or property management. While it might seem like a tough process, the benefits of reporting your credit last longer than the short-term effort you’ll put into reporting your rental payments to credit bureaus.
Having a good credit score is critical in the modern world and plays a role in every aspect of your financial life, and there are a large number of factors that can affect a credit score, positively or negatively.
The first step in understanding your credit score entirely is figuring out what your credit score is.
You can assess your credit score as you decide whether or not to report rental payments. There are a number of apps that can help renters effectively budgeting their time and money, and can help you figure out what your score is. Some of Rhino’s favorites are Mint, You Need a Budget, and Honeydue.
If you don’t have an extensive credit history or you have a low credit score, it can often be hard to build up good credit. If you’re in the business of paying rent on time, adding that payment history information to your credit report can help your credit score.
Reporting your rental payment history to credit bureaus takes a little bit of research and a bit of background knowledge. The first thing to know is that you aren’t able to report rent payments as renters. But the good news is that there are rent-reporting services ranging in cost from free to over $100 a year.
There are three major credit bureaus, Equifax, Experian and TransUnion. You’ll want to report your rental payments as on-time to each credit bureau. Once these credit bureaus have your data, it’s reported to different credit scoring companies like FICO and VantageScore. Seems simple enough, right?
There are two different types of rent reporting services that can help you send information about your rental payments to credit bureaus.
The first type of rent reporters is a service that you can use independently (without the help/involvement of a landlord or property management company). Below are several different options:
LevelCredit - Reports your rent and utility payments
MoCaFi - Free mobile app that submits your payment information to credit bureaus
Rentler - A mobile app that takes your rental payments directly
The second type of reporting agencies are services that you can use with the assistance of your landlord. Make sure to ask your property management company if it already reports rental payment data. Below are several different companies that involve a landlord in collecting rent payment information.
CreditMyRent: The company might reach out to your landlord in order to verify your rental agreement/lease (monthly fee costs as low as $15).
Cozy: Cozy allows landlords to accept rental payments through its app. While Cozy serves landlords, its payment system allows tenants to report payments to certain credit bureaus, such as Experian RentBureau.
Rental Kharma: The company requires your landlord to verify your tenancy via a phone call. This program works with TransUnion and Equifax credit reports and doesn’t require any change with how you pay your rent.
If none of these options work for you, you can find more third party options though WalletHub.
Simply paying your rent will not help you build credit, unless you pay with your credit card. However, by paying your rent with a credit card you might run the risk of high interest rates. However, reporting your consistent and on-time payments can help you build credit.
Having proof that you consistently paid your rent on time for the duration of an entire lease can also help you when you’re applying for your next place. This kind of documentation can persuade potential landlords to accept applications, as property managers prefer tenants who can prove a positive rental payment history.
While there are several different ways to help improve your credit score, reporting rental payments to the credit bureaus may be an option that you’ve never considered! With this information in hand, you can take the necessary steps to see if rent payment reporting is a viable option for you and get the process of increasing your credit score today.