Many folks who don’t have much credit history have a track record of paying their rent on time. That information, however, does not appear on their credit reports and does not assist their credit ratings.
You cannot report rent payments on your own. However, rent-reporting businesses can readily update your credit reports to reflect your rent payments for a fee that ranges from free (if your landlord pays) to more than $100 per year.
To make the most of a rent-reporting service, you’ll need to understand which credit bureaus it will report your payments to — and whose credit scores will take those payments into consideration.
Do Rent Payments Have An Impact On Credit?
If rent payment information is received, all three main credit agencies — Equifax, Experian, and TransUnion — will put it in credit reports.
Credit reports, in turn, supply the information that is used to calculate your credit scores. FICO and Vantage Score, the two major credit scoring organizations, treat rent payment information differently:
The most widely used versions of the FICO score do not include rental payment information in their calculations.
If you have rental information on your credit report, newer versions of FICO, such as FICO 9 and FICO 10, will take it into account.
FICO’s rival, VantageScore, takes rent payment information into account as well.
How to Select a Rental Reporting Service
First, discover if your property manager is already using a service. If not, here are some questions you should ask prospective rent-reporting service providers:
What would the entire cost of a year’s service be?
How do you safeguard my personal information?
To which of the three main credit bureaus do you report?
Do you offer free credit score access, and if yes, which score(s)?
When can I anticipate the information to show up on my credit report?
How can I discontinue the service?
Does Paying Rent Help You To Establish Credit?
Paying your rent alone will not help you develop credit. However, reporting your rent payments might help you improve credit, particularly if you are new to credit or have little experience with it.
If you rent again, having rental payment information on your credit report might be advantageous. Landlords favor renters that have a track record of paying on time.
However, some credit-building tactics are more effective than rent reporting since they affect all sorts of credit scores and typically report to all three credit agencies. They can also be less expensive or, in the case of approved users, free.