How To Report Rent To Credit Bureaus

How To Report Rent To Credit Bureaus

A good credit score can save you money and open the door to new financial opportunities. However, building up your credit can sometimes be challenging. If you’re currently renting and making timely full payments, you could benefit from reporting your rent to the credit bureaus. 

So, wondering how to report rent payments to the credit bureaus for free? Well, you might need your property manager to get on board. They might need to be the one to send your rent payment records to the credit bureaus, or they might need to verify records you try to send in yourself.

Even though the credit bureaus have been encouraging property managers to report for many years, few do so. If your property manager doesn’t report rental income, you could make a case for the benefits to them.

A study from TransUnion found that 73 percent of renters would be more likely to make on-time payments if they knew their rental records were being reported to the bureaus. Additionally, when presented with two similar properties with the only difference being reporting rental payments, 67 percent preferred the reporting property. 

So, it’s in the best interest of the property manager to start reporting rental income. And, in turn, this can significantly benefit you too. 

Do rent payments show up on your credit report?

Usually, no. This is particularly frustrating because mortgage payments do show up on credit reports. This felt very unfair for many years to renters, who are often working to build up their credit to one day get a mortgage. Luckily, the credit bureaus recognized this gap and came up with rent-reporting services. 

Rent-reporting services fall under the “alternative credit data” category. Alternative credit data refers to data that’s not typically collected by traditional credit reports. Individuals with poor or thin credit reports might turn to alternative credit data, such as rent reporting, to boost their credit. 

However, it should be noted that only some versions of credit scoring systems take rent payments into account once they’re on a credit report. All three major credit bureaus (Equifax, Experian and TransUnion) will accept rent payment data if they receive it.

From there, the credit bureaus send the credit report data to credit scoring systems, which take that data and assign a credit score. 

The two major credit scoring companies—FICO and VantageScore—approach rental payment data differently. For example:

  • Most versions of the FICO score don’t consider rental payment data when calculating credit scores.
  • The newer versions of the FICO score, FICO 9 and FICO 10, do consider rental data that’s included in your credit report.
  • VantageScore considers rental payment data for credit scores.

Ultimately, when you apply for a financial product and have your credit score checked, you don’t know which score the lender will use. You can’t be sure if they’ll use FICO or VantageScore or even which model of each of these they might use. This means your rental payment data can help in some situations, but not others. 

How can reporting rent help your credit?

Credit reports are a representation of a person’s track record with credit. The credit bureaus collect information from different financial institutions and lenders on a person’s payments (whether they’re on time, late or missed), debts owed, available credit and more.

Credit scoring systems then assign consumers a score based on their credit report data. This credit score is meant to represent how responsible someone is with credit. 

Someone who makes payments on time and in full will receive a higher credit score as they have a track record of paying back their lenders. In fact, 35 percent of your credit score is based on your payment history. 

Not everyone needs the boost that rent reporting can give their credit. Some individuals have a healthy credit score thanks to many years of responsible financial decisions. However, for those who aren’t in that place yet, rent reporting is a fantastic solution. 

The people who can benefit most from rent reporting are people who are credit invisible, people who want to build more credit and people who want to improve their credit. 

What are rent reporting services?

There are rent reporting companies that will report your rent payments to the credit bureaus on your behalf. Most rent reporting services charge a fee, but there are free options available. Note that your landlord will likely have to verify your rent to the rent reporting service before reporting can occur. 

Some of the most popular rent reporting services are:

  • Rental Kharma: Rental Kharma will add up to six months of your previous rental payments to your credit report. There’s a $50 one-time start-up fee and an ongoing monthly fee of $8.95. You don’t sign a contract, and you can cancel at any time. 
  • CreditMyRent: CreditMyRent starts with reporting one previous rental payment and then each additional month’s rental payment moving forward. There’s no start-up fee, and the monthly cost is $14.95. There are more expensive packages available if you want to include more months of previous rent. 
  • Rock the Score: Rock the Score requires a one-time setup fee of $48 and then charges $6.95 per month for monthly reporting of rent payments. Individuals can choose to pay $65 for up to two years of previous rental payments to be reported. 
  • Level Credit: Level Credit offers rent reporting services for as little as $6.95 a month. Individuals can pay a one-time fee to include reporting on the past two years of rental payments.  
  • Esusu: Esusu is free for tenants who have a landlord using the platform. Otherwise, customers can pay $50 for annual rent reporting. 

Are you looking to report your rent but hoping for a free option? If you can convince your landlord to implement rent reporting, the fees will be paid by them. You can argue that the cost is worth it to most property managers because it reduces missed and late rent payments. 

What should you look for in a rent reporting service?

Not all rent reporting services are created equal. You should evaluate each option and find the one that works best for you. Some of the criteria you should consider are:

  • Which credit bureaus they report to and if they’ll protect your info
  • How much they cost
  • How far back they can go with regard to reporting your payments
  • How long it will take for the information to show up on your reports
  • The process for collecting information from your landlord
  • How to cancel

How to get started with rent reporting

The first step is to talk to your landlord. They may have a rent reporting process already set up and you’ll simply have to enroll. If they don’t have one, you can try convincing them to implement a rent reporting system. 

Even if your landlord doesn’t want to take on rent reporting, you’ll want to make sure they’re willing to respond to a rent reporting company’s request for rent payment verification. Many rent reporting services require proof directly from the property manager. 

If you’re looking into rent payment reporting, take a moment to be honest with yourself. You should only be pursuing this option if you can make all your payments on time. Remember that all of your rent payments are going to be reported, including late and missed payments. If you don’t make on-time and full payments, the reporting will actually hurt your score. 

After you’ve implemented rent reporting, check your credit reports to see what shows up. For example, if you ordered the past year’s rent payments to be included, you’ll want to make sure all of them are actually reported. Next, monitor your credit score to watch the gradual improvement. 

Lastly, if you’re going through the effort of improving your credit with rent payment records, look at what else you can do. You can improve your credit in many ways, including making credit card payments on time, reducing debt and maintaining a healthy credit utilization ratio. 

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Author J Lipsky

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