This article was origianlly published on June 9, 2018.
The so-called "American Dream" of owning a home is changing. For many people, renting suits their need for flexibility, and can be an economic necessity with rising home prices and soaring student loan debt.
According to the Pew Research Center, the total number of households headed by renters grew significantly from 2006 to 2016, jumping from 34.6 million to 43.3 million households. People younger than 35 make up about 65% of the 43.3 million renting households.
Head-of-household renters, especially young people, have been in a credit Catch-22: Almost all have been paying their rent responsibly and on time, but that track record of on-time payments has not been reflected in their credit history. Fortunately, that situation is changing for the better.
Rental payments can now be reported to the three credit reporting agencies, Experian, Equifax and TransUnion, and the newest credit scoring models use rental-payment data when calculating your credit score.
If you are a renter, this means that you can build—or start—your credit history without taking on additional debt, and potentially improve your credit score with your on-time rental payments. Get your rental account reported and it will show on your credit report, then every month when you pay your rent, your positive account history will continue to grow.
Credit grantors, such as banks, credit card companies, auto finance companies, and telecommunications companies will be able to see that positive payment history, which is a good signal that you have the ability to pay bills on time and manage your money.
Another way you can get credit for your positive payment history is by taking advantage of tools like Experian Boost, a new platform that will allow you to instantly increase your FICO® Score by adding utility and phone bill payments to your credit file. Experian Boost will be available in early 2019, but you can visit experian.com/boost now to register for early access.
How to Get Your Rental Payments On Your Credit Reports
Depending on if you are renting from a large apartment complex or a private party, it may take a little initial legwork to get the reporting process started. But after that, your rental payments can be reported to the credit reporting agencies every month. A few tips are below, and this helpful FAQ can provide more details.
The first step in getting your rental account reported to the credit-reporting agencies is to ask your landlord or property management company since not all landlords "automatically" report rental payments. If you rent from an individual landlord or property management company that does not yet report data, sign up through a rent payment service such as:
RentTrack reports to all three credit reporting agencies. If your landlord is not a RentTrack client, RentTrack collects the rent for a $6.95 fee and then sends a check to your landlord. If your landlord is a RentTrack client, fees are less.
This service debits your rent from your checking or savings account. There's no cost to tenants, but your landlord must be signed on with ClearNow. If you opt in, payments are reported to Experian.
This service reports to all three credit reporting companies. Fees vary, depending on how you pay your rent. In some cases, the fees are paid by your property management company.
Cozy offers landlords and property managers software tools, including rent payment processing. Residential landlords pay $9 a month per unit to join Cozy and receive auto-payments each month from tenants' bank accounts, but it's free to renters. Renters can also create a personal profile that can simplify the apartment application process. Cozy reports rental payments to Experian.
These services allow for the payment and collection of your rent electronically, and you can opt-in to have your rental payment history to one or all of the credit reporting agencies. Some of these services charge fees and some don't so be sure to ask about initial and ongoing fees.
Notably, the list above does not include all rent reporting services. There are more, so again speak with your landlord or property management company. Also, some services may need your landlord to verify your rent payments.
Lastly, keep in mind that only the newest credit scores consider rental data when calculating your credit scores, and not all lenders use the newest credit scores. The most commonly used versions of the FICO® Score don't use rental payment information in calculating scores, but FICO 9 and FICO XD do.
Want to learn more? Check out these additional articles about renting and credit:
- Can Rental Data Help Establish Credit?
- Do Apartments Report Your Monthly Payments to Credit Bureaus?
- Can Rent Payment Be Put On My Credit Report?
You can get more information about how to monitor, protect and manage your credit at experian.com/education. If you have questions, submit them through Experian's Facebook or Twitter with the hashtag, #AskSusie. You can also email me your questions directly at AskSusie@experian.com and I will answer them here.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
This article was originally published on December 18, 2018, and has been updated.