Rent payments not shown in credit report

Dear JES,

Rent falls into a category referred to as “alternative credit data.” It is like traditional forms of credit in that you make a regular payment each month, but it is not exactly the same. Utility payments and telephone or cellular bills fall into the same category. None of them are regularly reported to Experian today, although they may be in the future.

There are several reasons these credit-like payments are not reported regularly to the national credit reporting companies.

The first is related to the cost of doing so for the landlord or service provider. In order to report information, the business must subscribe to Experian’s services so that it has a contract specifying that the business will comply with all laws and with Experian’s policy requirements. Those requirements include making accurate and regular payment updates and responding to disputes within the legally required timeframes using appropriate technology to ensure timeliness and accuracy.

Meeting those requirements for all the credit reporting companies requires a substantial investment in subscriber fees, facilities, labor, equipment and technology. The expense for reporting just a few rental payments is simply too cost prohibitive in most cases, and almost certainly would be for your realtor.

Some state laws prohibit reporting certain types of information, particularly utility payments. In those instances, changes to the law must be made before the payments can become part of a credit report.

Another issue is related to the information itself.

Any information in a credit report must be useful in predicting how a person will repay his or her debts in the future. It’s not completely clear yet that “alternative credit data,” like rent payments, accurately indicates the likelihood of future payment in the same way that traditional credit payments do.

However, Experian believes such information is highly predictive and would be very beneficial to consumers who have little or no previous credit history, and thus, find it difficult to buy a house or get a car loan. We are continuing to research ways in which to incorporate the information into credit reports and hope that it will soon be reported regularly.

Thanks for asking.