How Paying Rent Can Help Your Credit Score
How paying rent can help your credit score
While traditional credit scoring models focus on factors like on-time payments for conventional loans and credit cards, tenants and landlords can report a renter’s rental payments so they appear on their credit reports. For those making regular on-time payments, this can help boost your credit score.
- There are several ways to have your rent payments factored into your credit score, including having your landlord report the payments or using rent reporting services.
- Reporting rent payments can impact you positively when you’re making on-time payments, but it can also hurt your score if you’re making late payments.
- There are multiple rent reporting companies you can consider, but each has their own pros and cons.
Does renting affect your credit score?
Yes, renting can affect your credit score in both positive and negative ways, depending on your payment history and whether your payments are reported to credit bureaus.
If you’re consistently making on-time payments, your credit score can increase. Keep in mind that payment history makes up 35% of FICO’s credit scoring model, so an additional source reporting substantial on-time payments can be significant.
But your rental history can negatively impact your credit score, too. If you make late payments or miss payments altogether and your landlord reports it, it can show up on your credit report and impact your score quickly. A single missed payment can stay on your credit score for up to seven years. If you fail to make that payment, your landlord or rental company could rely on a collection agency to collect the debt, which could impact your credit score further.
While rent reporting can help many tenants, it’s important to consider whether it’s right for you. In 2022, the National Low Income Housing Coalition found that low-income households were at higher risk for having their credit scores significantly impacted by negative payments, which could increase their risk for ramifications like difficulty securing housing in the future.
3 ways to have your rent calculated as part of your credit score
There are a few different ways you can have rent payments submitted to credit bureaus so that they can count towards your credit score: Your landlord can report the payments, you can use Experian Boost or you can sign up with a rent reporting company.
1. Talk to your landlord
- Pro: Your landlord manages reporting themselves, giving you one less thing to manage.
- Con: You’re not in control of reporting, and landlords may not be willing to stop reporting if you change your mind or are late on rent.
Landlords and rental companies can choose to report their tenant’s rental payments. In some jurisdictions, it may even be a legal requirement that landlords offer this to tenants. If they don’t already report your rental payments to credit bureaus, however, you can ask that they do so.
Landlords can either report the payments to credit bureaus directly or they can use rent reporting services to streamline the process.
While having your landlord manage the reporting is the easiest solution, you may not have as much control about which credit bureaus are receiving the recorded payments or when the reporting ends.
2. Experian Boost
- Pro: Free, easy-to-setup service that includes rent payment reporting alongside features like FICO Score access and a free identity scan.
- Con: Some users don’t feel comfortable connecting their bank account to Experian’s platform.
Experian Boost is a free credit-building tool you can use to record on-time payments for utility bills, insurance premiums and rent. You can securely connect your bank accounts to Experian Boost, which detects on-time payments for bills and rent.
You can add rent payments to Experian Boost if they’re over a qualifying amount and made online through a rent payment platform or to eligible landlords. You also must make at least three payments within six months and one must be within the last three months.
3. Rent reporting companies
- Pro: Allows you to choose a rental reporting service that offers the services you want, such as reporting to all three credit bureaus.
- Con: Requires you to pay for and manage a reporting service subscription yourself.
You can enroll in rent reporting services even if your landlord doesn’t offer them through a third-party company. Some services may require you to connect your bank account to verify rental payments, and several may even look back up to 24 months to record past payments. It may take up to 30 days to record payments and impact your credit score.
The downside of enrolling in a rent reporting service yourself is that it may come with a cost. The cost is typically low (potentially as little as $3 a month), but it’s an extra expense and service that you need to manage yourself.
Whether you use a rent reporting company or ask your landlord to report your rent payments directly, it’s important to ask which credit bureaus they’re reporting to.
Different lenders use different credit bureaus to get information on your credit history, so if your landlord is only sending information to one credit bureau, it may not help you the next time you apply for a credit card or mortgage if that’s not the report being used.
If possible, ask that your rental payments are reported to all three credit bureaus.
5 rent reporting companies to consider
If you want to enroll in a rent reporting service, make sure you look for a solution that offers the key features you need at a price point you’re comfortable with. While these are a good jumping-off point for research, the best option for you will depend on what features you’re looking for.
Self
- Starting cost: Free
Self reports rent payments to all three major credit bureaus and also includes up to five cell phone and utility payments reports per month at no additional cost (though utility payments are only reported to TransUnion). It works with a secure connection to your bank account, and payments are typically reported to TransUnion in as little as 72 hours.
RentReporters
- Starting cost: $94.95 setup fee + $10.95/month (monthly plan)
RentReporters can report up to four years of past rent payments and claims users see credit score increases in as little as 10 days. The service reports to all three credit bureaus. The main drawback is the high upfront setup fee, though they include historical rent reporting at no additional cost, which other services typically charge extra for.
Credit Rent Boost
- Starting cost: $6.95/month for ongoing rent reporting, plus additional charges for past rent reporting
Credit Rent Boost lets you automatically report rent on an ongoing basis, though you can also pay extra one-time charges to look back either one or two years. The company claims that users who leverage both past and ongoing reporting see an average score increase of 30 to 100 points, and they offer discounts for spouses or roommates.
Rental Kharma
- Starting cost: $8.95/month subscription + optional $75 fee to report past rent
Rental Kharma only reports to two credit bureaus, TransUnion and Equifax, but it has more flexibility than some other services. It can track payments made through multiple methods, including online, cash, check and money order payments, making it more versatile. The subscription cost also includes the option to cancel anytime and benefits like a free one-on-one credit mentoring session.
RentTrack
- Starting cost: Not disclosed until after signing up
RentTrack is a solution landlords can offer renters as an optional amenity — not one that renters sign up for directly. It reports to all three credit bureaus and offers additional services like credit monitoring and monthly credit scores.
While the service requires landlord involvement to provide payment data, it can report up to 24 months of previous payments for a one-time $50 fee. While more expensive than some alternatives, the comprehensive credit monitoring tools may justify the higher cost for users wanting ongoing credit oversight.
Reporting rental payments can impact your score in different ways, depending on your current score and payment history.
If you have a relatively limited credit history and you regularly make on-time rent payments, reporting rent can help your credit score significantly. A single late payment, however, can hurt your score immediately by up to around 100 points.
Other ways to boost your credit score
Making regular, on-time payments for your rent is an effective way to improve your credit score. To boost your score further:
- Make on-time payments. On-time payments make up 35% to 40% of your score for the major scoring models and credit bureaus, so use auto-pay features or calendar reminders so you never miss a payment.
- Keep debt utilization low. When you are only using a small amount of your available credit, you’re seen as a lower risk to lenders. Pay off any debt you can to improve your debt utilization rate.
- Don’t apply for too much credit too quickly. Hard inquiries (which may be used for loan or credit applications) can lower your credit score by a few points, but multiple hard inquiries in a short period of time may have a compounding impact when lenders view your credit report.
- Become an authorized user. Use “credit piggybacking” to improve your credit by becoming an authorized user on a friend or family member’s credit card. This can give you the benefits of their positive payment history, but note that if they miss a payment, it can also hurt your score, too.
Make sure you monitor your credit regularly with tools like LendingTree Spring, which can help you track your score and see the impact of rent reporting. You can also watch for any errors, which you can dispute to have them removed from your credit report.
Frequently asked questions
How late you can be on rent before it affects your credit depends heavily on your agreement with your landlord. Some may offer a grace period, typically between three to five days, before a payment is considered late. Some credit bureaus consider failing to make a payment 30 days or more after the deadline as a late or missed payment.
Keep in mind that not all landlords report payments to credit bureaus. If this is the case, a late payment won’t show up on your credit report and your credit won’t be impacted.
If you fail to make the payment entirely, however, the debt may be sent to a collection agency. This debt can then impact your credit report if you don’t pay.
Late or missed payments leading up to an eviction can lower your credit score if they’re reported to credit bureaus. Evictions themselves won’t impact your credit score, as they aren’t reported to credit bureaus, but they can still impact you in two ways:
- The debt may be sent to a collection agency. This debt can then impact your credit report if you don’t pay.
- Evictions are public record and can show up in background checks or in screenings future landlords may use to assess your application. Evictions can stay in tenant screening reports for up to seven years.
Yes, you can unenroll from rent reporting services if you’ve opted in to use them.
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