Can you boost your credit score just by keeping your landlords happy? Till 2010, the answer would have been a straight ‘no’. But from 2011, the situation changed after Experian acquired RentBureau. As the name suggests, RentBureau is a special credit reporting agency that mainly focuses on rental payments. They collect rental payment information from property managers and report them to Experian. The information is then added to your credit report.
Apart from the Experian, the TransUnion also updates rental payments on consumers’ credit reports when data is there. However, it appears as a ‘trade line expense’ on the credit report.
Did landlords report rental payments to credit bureaus?
Earlier, most landlords and property managers used to report to credit bureaus when tenants used to default on their rental payments. They didn’t inform credit bureaus about the positive rental payments. Since positive rental payments were not reported on credit reports, so they were not included in credit score calculations. Only negative payments were reported, and that dropped tenants’ credit score.
What should you do to get your rental payments counted?
As I have said earlier, most landlords don’t report rental payment data to credit bureaus. So, if you’re thinking about renting an apartment, then your first job would be to ask the property manager if he/she reports rental payment data to Experian RentBureau. If he/she doesn’t, then request him/her to participate.
In case, the property management company doesn’t report to credit bureaus, then it would be better to use a rental payment service that works with the Experian RentBureau. The best part of this service is that it allows you to pay rent online and report payment data to Experian. Some of the notable rental payment services are WiliamPaid and ClearNow.
How much rental payments can hurt your credit score?
Payment history accounts for 35 percent of your credit score. If your rental payment history accounts for a big part of your payment history, then there would be a significant effect on your credit score. However, the effect will be less when your rental payment is only a small part of your payment history.
Experian does not report late rental payments to credit reports. They only add paid-as-agreed rental payments. This means if you can make timely rent payments, then your credit score is bound to increase.
Bottom line
Never think you can upgrade your credit score just by making timely credit card payments. Pay your rent on time and check if your rental payment information is updated on your credit report. If it isn’t reported properly, then sign up for rental payment services.
