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How to report rent payments to a credit bureau
Reporting rent payments to build credit
Most people are surprised to learn that paying rent on your apartment, home, or condo can help you improve your credit score. That’s because, unlike credit cards, mortgage, and loan payments, rent payments don’t usually automatically appear on your credit report. But you can pay to get those rent payments reported, and since It’s likely your largest monthly expense per month, why not report rent payments to improve your score? Especially if you have a thin credit file (fancy speak meaning very little credit) or are trying to improve credit. But how to report rent payments to a credit bureau, you ask? Let’s explore.
How to find out if your rent is being reported
Get a copy of your credit report
All three major credit bureaus — Experian, Transunion, and Equifax— do include rent payment information in a credit report if they receive it. They are required to give you an annual free copy of your report.
Ask your property manager
Most smaller mom and pop landlords are most likely not rent reporting, but apartment complexes owned by larger multifamily real estate companies might be partnering with a business like Roost that does rent reporting for them either as a financial amenity or at a reduced cost compared to working directly with a rent reporting service yourself.
How to report rent payments to build credit history
If your property doesn’t report rent payments, you can do it yourself by using a rent payment reporting service.
You cannot self-report rent payments to credit bureaus directly as they are looking for a neutral, third-party to verify payments.
Rent reporting services compared
|Roost||Partners directly with your landlord. Charges a $2.99 monthly fee. Reports only positive payments to all three credit bureaus. If you’re a Roost member you can learn more about it here.|
|Rent Reporters||There is a one-time enrollment fee of $94.95, which includes up to two years of reported rental payments, then the service is $9.95 per month. It reports to TransUnion and Equifax.|
|Rental Kharma||The initial setup is $75, and the service is $8.95 per month. Rental Kharma automatically includes all past rental history at your current residence. It reports to TransUnion and Equifax.|
|ClearNow||This service partners directly with landlords and management companies. There’s no direct cost to tenants unless your property is passing along the fee to you. If you opt-in, your payments are reported to Experian RentBureau.|
|CreditRentBoost||This service charges a monthly fee of $6.95 in addition to a one-time fee of $25. It reports to TransUnion and Equifax.|
|Esusu||Works directly with property managers. Esusu reports rent payments to Equifax.|
|LevelCredit||Owned by Self, LevelCredit Charges a $6.95 monthly fee to have your rent and utility payments reported to Experian, Equifax and TransUnion. For a one-time fee of $49.95 they will add 24 months of previous rent payments.|
|PayYourRent||This service debits your rent from your checking or savings account and requires your property to sign up. It reports to all three credit bureaus.|
|Rock the Score||This service charges a monthly fee of $6.95 in addition to a $48 one-time fee and offers a 1 time historical reporting fee of $65. It reports to TransUnion and Equifax.|
|Zego Credit||Zego partners with LevelCredit and is free. They partner directly with your landlord or property manager. Your rent data is sent Equifax or TransUnion. Add-on services are available to report up to 24 months of prior rent payment ts for $19.95 (current address) or $29.95 (prior address).|
How much will my credit score increase if I report rent payments?
According to an Experian report approximately 75% of people who report rent saw credit score improvements of 11 to 29 points.
Rent payment reporting services have also reported score increases. According to Esusu,
- People who verify two years of rental history and already have established credit could see an increase of 25-50 points.
- People with no credit score could jump up to the mid-600s by adding two years of rental payments to their credit file.
A 2020 joint study from HUD and PERC found subprime consumers who made timely rental payments saw an average increase of 26 points.
Using rent payments to establish a credit history
About 10% of Americans are credit invisible
Being credit invisible means that you don’t have any credit history with the three major bureaus.
About 10 percent of Americans fit into this category, and almost 20 million more have credit scores that don’t have enough credit information or recent history for the agencies to score.
Many of the people who fall into these categories are renters.
Being in this category isn’t all bad, of course, since it means you’re not drowning in debt. It also means that you don’t have enough of a credit score to give financial institutions confidence in lending to you.
Being credit invisible can make it tough for you to:
- Rent a car
- Qualify for a car loan
- Buy a home
- Get an apartment
- Qualify for personal loans
If you do qualify for a loan or are signing up for insurance, for example, you may experience much high interest rates and insurance premiums.
Transunion study indicates that rent reporting helps motivate renters to pay on time
The joint HUD/PERC study jives with information from a TransUnion study which indicates that rent reporting helps motivate renters to pay on time.
The reporting holds the renter accountable to the agencies, adding positive pressure to get them to pay on time.
Not only will they avoid conflict with their landlord (and potential late fees), they’ll have a positive benefit of building that credit score or pulling it out of the “invisible” category.
This figure was even higher in Generation Z and Millennial renters, who are most often the ones who are “credit invisible” and would therefore see the benefit of rent reporting.
In some cases, the study showed that the majority of renters would choose a unit that included automatic rent reporting to an identical unit that did not offer that feature.
Other strategies to build credit in addition to reporting rent payments
If you’re looking to build credit, there are maybe faster strategies, such as a secured credit card or credit-builder loan from a credit union. But paying your rent on time and reporting that information to the reporting agencies can often be the right move.
It can help you move out of the “credit invisibility” category. Furthermore, it’s been shown that renters with poor credit can raise their scores significantly simply by doing what they need to — paying rent.
If you want to raise your credit score — especially if you want to transition from being a renter to being a homeowner — then it may be a good idea to try and get your score up by paying your rent, in full and on time.
When you’re looking for a new apartment, ask about rent reporting, or talk to your current landlord about whether it’s an option for you.
What to look for in a rent-reporting service
First, check to see if your landlord/property manager already has a service in place for free. If you need to find your own service, make sure to evaluate the following:
- Fees: Cost to join, monthly fee, and “look back” fees (how many months of back history will they add for you)
- Do they report positive payments only
- How easy it is to cancel
- How they protect your data
- How long it will take before payments appear on your credit report
- Which credit bureaus they report to (preferably all three)
- What happens in the case of a dispute with your landlord. Is this reported as nonpayment, even if you live in a state that allows renters the right to withhold payment when the landlord fails to maintain habitable living conditions?
Using a credit card to make rent payments
Some properties allow you to pay your rent using a debit or credit card. Regular, on-time credit card payments will also help you boost your credit score.
If you do this, make sure to pay it off in full, so you do not carry a balance for your rent and pay interest on it.
Also, consider the extra fee your landlord may charge you if you pay by credit card. This is typically 3% to offset their fees for taking the payment by credit card. It all adds up!
How do late payments affect my credit score?
If you regularly miss payments, rent reporting will potentially hurt your credit score rather than help. Anyone who pulls your credit report will see your spotty payment history which could make them hesitant to lend to you.
Rent-reporting companies may report the missed payment if more than 30 days late. If you skip your rent, then your property manager will begin the eviction process and likely send unpaid rent to a debt collection.
The unpaid rent leading up to an eviction may be listed as negative on your credit reports and collection accounts seriously damage your credit scores.
Does applying for an apartment or home hurt my credit?
When you apply for a new apartment, the landlord requests a copy of your credit report. This request initiates a hard inquiry credit pull that does affect your credit score.
The good news is that a single hard inquiry doesn’t impact it much and will no longer affect your credit after 12 months.
Your credit score will take a hit if too many hard credit inquiry requests come in over a short period of time.
Managing your credit
Managing your credit is an important part of life and directly impacts the cost of future credit cards, auto loans, and more.
Paying rent on your apartment, home or condo is a great way to demonstrate responsible behavior to potential creditors — to both establish, build, or rebuild your credit.
It doesn’t happen automatically, though, so figure out how to report rent payments to a credit bureau — ask your landlord for the service or look to one of the rent payment services to report rent payments for you for a fee. And, above all else, pay that rent on time.
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