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When you review your credit reports, you might notice that your history making on-time rent payments isn't listed anywhere. But that doesn't mean there's no way to use your history as a reliable tenant to improve how lenders and credit card issuers view you as a borrower.
There are steps you can take to add your monthly rent payments to your credit reports and possibly improve your credit scores in the process. Here's how to do it and why you may want to.
What Information Is Included in a Credit Report?
Because landlords and property management companies aren't considered creditors, they do not automatically report your payment history to the three major consumer credit reporting bureaus—Experian, TransUnion and Equifax. Nor will they report evictions, bounced checks, broken leases or property damage. You might, however, end up with a collection account on your credit report if you leave behind unpaid debt after you move out.
Most of the information that appears on consumer credit reports comes from lenders, banks, credit unions and, in some cases, the courts. These entities regularly furnish the three credit reporting bureaus with data regarding your credit application and usage activity. Each credit report has four sections:
- Personal information: Your name, birth date, current and past home addresses, phone numbers and employers you've listed on credit applications will be here.
- Accounts: This lists your tradelines, such as credit cards, loans, lines of credit and collection accounts. It will include partial account numbers, last-reported balances, payment history and account status (open, closed, etc.).
- Public records: If you've filed for bankruptcy, details about it will appear in this section.
- Inquiries: If a company requests your credit report for business purposes or if you check your own, a soft inquiry will appear. When you apply for credit, such as a loan or credit card, it will be noted as a hard inquiry. Both types of inquiries vanish after two years and only hard inquiries can affect your credit score.
In 2010, Experian became the first credit reporting bureau to include on-time rental payment data on its credit reports via Experian RentBureau. Since a pattern of timely rent payments can be a predictor of positive credit use in the future, and it can greatly benefit those looking to build their credit history and gain access to things like credit cards and loans.
How to Get Your Rental Payments on Your Credit Reports
Since landlord or property management companies don't usually supply information to the credit bureaus on their own, you'll need to take action if you'd like to make it happen.
- Contact your landlord or property management company. Ask if they are willing and able to report your rental payment history directly to Experian RentBureau. If they agree, your lease will appear in the "accounts" section of your Experian report as one of your tradelines. It will list the date the lease started, your monthly payment amount and your payment history for the past 25 months. Refer the person or company you deal with to Experian RentBureau.
- Enroll in a third-party service. Even if your landlord or property management company doesn't participate directly with Experian RentBureau, you can sign up with a fee-based rent payment service that reports to the credit bureaus upon request. Companies such as RentTrack, PayYourRent, eRentPayment, PayLease, Cozy and ClearNow collect and disburse rent payments, and give you the option to opt in for Experian RentBureau.
Another key advantage of adding rental payments to your credit reports is that it allows you to build or improve a credit score without having to apply for a new credit product. This could be a wise course of action if you're avoiding credit products in an effort to steer clear of debt. All you would need to do is manage your rent as normal by sending your payments when you should.
Does Paying Rent Improve Your Credit Score?
Although landlords and property management companies aren't required to report payments to the credit bureaus, a perfect payment pattern is still something to strive for. Not only will that information be appealing to anyone reviewing your credit report, adding a well-managed lease to your reports can cause your credit scores to rise.
Payment history is the weightiest scoring factor in both the FICO® Score☉ and VantageScore® models, so the more evidence that you have been paying your bills on time, the better. Bear in mind that only the newest versions of the FICO® Score and VantageScore® models consider rental data, and some lenders still use older versions.
However, for the most current credit scoring systems that do take rental history into account, your on-time rental payments can give your scores a lift, especially if your credit history is young or you've had some credit problems in the past. According to Experian's Credit for Renting study, 75% of study participants who were scoreable before rental data was included on their credit files found that adding rental history increased their credit score. On average, those who saw an increase experienced a VantageScore 3.0 increase of 29 points.
The Bottom Line
Getting credit for all your responsible financial actions makes perfect sense, particularly if you're trying to build or improve your creditworthiness. When your credit reports are filled with positive information, your scores can rise as a result, and you might appear more attractive as a tenant should you want to rent again. Always maintain a close watch on your credit reports. There's no fee to pull your Experian report and you'll be able to see how the rent data you've ensured is on it is being recorded.