Rent doesn’t traditionally count towards someone’s credit score — landlords aren’t lenders, so rent isn’t technically debt. However, if a third-party reporting service reports rent payments, a good rental payment history may impact your credit score and show potential lenders that you’re reliable. Just like with a credit card or loan, if you have a rental history of consistent, on-time monthly payments towards your rent, it may positively impact your credit.
To have rent payments considered in your credit score calculation, you have to have them reported to a third-party rent reporting service that then reports them to credit bureaus. This post walks you through the different rent reporting services, the pros and cons of payment reporting, and alternative strategies for building credit.
A rent reporting service is a third-party service that records and reports your ongoing rent payment history to credit bureaus. Some will also report up to two years of past payments at your current residence.
They do generally require a setup fee for individuals to enroll and a monthly or annual fee, though the cost varies depending on the rent reporter. If your landlord or property management company already works with a rent reporting service, or reports rent payments directly to credit bureaus themselves, they may pass on the cost of this to you.
The next sections detail providers of major rent reporting services for individual tenants. Most have a cost to enroll as well as a cost for ongoing reporting services. Although many tout that they allow you to work independently of a landlord — meaning your landlord doesn’t have to sign up for the service — your landlord may still need to be contacted to verify your information.
Boom is an app that not only reports rental payments, but also gives renters more control over the payments they make through flexible payment options like installments. It can report up to 24 months of past rent payment history.
LevelCredit allows subscribers to add rent payments, as well as cell phone and utility bills (electric, water and gas), to their credit report.
Rental Kharma is a rent reporting service for tenants who pay rent to the owner of a property, whether it’s a landlord, family member or property management company, so long as the owner can verify the tenant’s payments. It offers historical reporting of all past payment history at your current address, included in the enrollment fee.
RentReporters is a rent reporting service that offers up to 48 months of past rent payment history for its subscribers as well as ongoing rent payment monitoring. It does require your landlord to verify your payments but is more flexible than some services, allowing tenants who are not on a formal lease to participate.
While many rent reporters allow you to sign up on your own, only involving your landlord for address and payment verification, some rent reporting services require your landlord or property manager to be the primary point of contact.
For these rent reporters, your landlord would sign up for or pay into the service so that you or other tenants can use it. These services may still have costs for tenants, like subscription fees passed down from your landlord. They also require tenant involvement to ensure that information is reported accurately.
A free service for tenants, ClearNow becomes the intermediary for your rent payments, collecting them from your bank account and depositing them into your landlord’s bank account when rent is due. While enrollment is handled by the landlord or property manager, the service does require tenants’ bank information.
CreditBoost is a rent reporting service that offers unique control to the tenant. If your landlord accepts rent payments through Avail, you can turn CreditBoost on and off to report your rent. For example, landlords can manually report late payments that are more than 30 days late. However, because you’re given an alert before your payment is 30 days late, you have the option to make your payment to avoid having a late payment reported.
This service allows you to report past (up to 24 months) or current payments and promises an update to your credit report within 30 days of opting into the service. If you want to report past payments before beginning with CreditBoost, you will pay a fee upfront for this reporting. If reporting current payments, you can pay the historical reporting fee with your monthly subscription. Your landlord will have to verify past payment information.
Esusu Rent was created to help people with bad credit or limited credit history build their credit through rent payments. Although it’s currently only available to individuals whose landlords or property managers have an agreement with the service, Esusu Rent has an individual renter program in the works.
PayYourRent is a service that handles rent payments, with same-day processing for property managers, allowing you to build credit with each payment. Although renters don’t pay directly for this service, they may pay additional fees to their landlords who opt to use the service and pass along the costs.
The first rent reporter to build relationships with all three major credit bureaus, RentTrack allows tenants to build credit by paying their rent as normal, collecting payment information from the property manager. RentTrack may also be able to report up to 24 months of historical payment data.
As with any choice that has to do with your finances, be sure to consider your own personal financial situation to see if the benefits outweigh the costs.
For example, if you consistently make on time rent payments, and have a good payment history at your current address, you may benefit from having this information counted towards your credit score.
Consider some potential pros and cons of opting into a rent reporting service.
When choosing a rent reporting service, be sure to assess the needs of your financial situation, and think of how each option may help you achieve your goals. If you have bad credit or limited credit history, the stakes can feel especially high.
Consider the following factors when weighing your options:
While reporting your rent can be a way to help build your credit, you can find many other options to help your credit score. Try some of these credit-building strategies.
A credit builder loan is a loan that exists specifically to help you build positive credit history. It’s more like building savings while making loan payments. You make monthly payments to the lender until you’ve made all the payments for the loan. Then, the loan money is given to you (minus interest and fees).
A credit builder loan or account can be a good way to start building credit, as many don’t require a credit history to qualify. However, these loans still involve some aspects of traditional loans, like interest, so it’s good to look for flexible rates and terms.
Self’s Credit Builder Account, for example, has four plans with a $9 administration fee , offering different monthly payments, interest rates and lengths, so you choose what works best for your financial situation.
A secured credit card works like a regular credit card — it just requires a security deposit to open an account. The security deposit reduces risk to the lender, so it’s generally easier for borrowers to qualify for a secured credit card than an unsecured one. When you make payments, those payments get reported to the credit bureaus. So making on-time payments can positively impact your credit score.
Becoming an authorized user on someone’s credit account means that you’re authorized to use their card to make purchases but aren’t legally responsible for making payments. If the primary user is someone you trust and they trust you, this may be a fairly risk-free way to start building credit, especially if you can’t yet qualify for a credit card yourself. However, be sure the person willing to make you a primary user makes payments as agreed, has had the account for quite some time and maintains a low credit utilization ratio (the revolving balance divided by the credit limit on the card) on the account.
Having a credit card with someone who has a good credit score not only helps you begin building credit if you have poor or limited credit history, but it can also increase your creditworthiness. Keep in mind, however, that not all lenders report authorized user activity to credit bureaus.
When trying to build credit, it’s important to monitor your credit health by keeping tabs on your credit report. That way, you’re always aware of your open accounts, balances and, generally, where you stand. You can check your credit report as often as you want without hurting it, and you can check your credit report once per year for free from each of the major credit bureaus, through AnnualCreditReport.com.
Checking your credit report regularly also ensures that you’ll catch any incorrect or misreported information, or missing accounts or payments. Be sure to file a dispute with each credit bureau, if you catch any issues immediately so that they are corrected quickly.
Reporting your rent to credit bureaus may elevate your credit score. If you’ve made consistent, on-time monthly payments at your current address for the last couple of years, this is evidence of your reliability that lenders want to see.
Services like LevelCredit can help make sure that you benefit from your positive rent payment history, past and ongoing. Take credit for the on-time payments you’re already making by paying rent — you deserve to be rewarded for your hard work!
Disclaimer: FICO is a registered trademark of Fair Issac Corporation in the United States and other countries.
Ana Gonzalez-Ribeiro, MBA, AFC® is an Accredited Financial Counselor® and a Bilingual Personal Finance Writer and Educator dedicated to helping populations that need financial literacy and counseling. Her informative articles have been published in various news outlets and websites including Huffington Post, Fidelity, Fox Business News, MSN and Yahoo Finance. She also founded the personal financial and motivational site www.AcetheJourney.com and translated into Spanish the book, Financial Advice for Blue Collar America by Kathryn B. Hauer, CFP. Ana teaches Spanish or English personal finance courses on behalf of the W!SE (Working In Support of Education) program has taught workshops for nonprofits in NYC.
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