How Rent Payments Can Help Lift Credit Scores
Establishing a history of consistently on-time credit and debt payments will help you build a good credit score. Rent payments often aren’t reported to credit bureaus, so they don’t necessarily help your credit. However, premium services are available if you’d like to start having your landlord report your positive rent payments to improve your credit score.
Does paying rent help your credit score?
Paying your rent (or utility bills) on time doesn’t always help your credit score like a mortgage payment would. Unless your landlord already uses a rent reporting service, your payment information won’t show up on your credit report or help your score. Some versions of FICO and VantageScore factor in rental payments if they’re reported to the credit bureaus, but not all credit scoring models do.
Each credit bureau aggregates information about your credit and debt: Credit cards, point-of-sale financing, car loans and other debt payments are reflected in your credit score. Rent payments aren’t automatically reported like that other information.
But, if you use a rent reporting service, you can get that information onto your credit report and improve your score (as long as you make on-time payments).
How to boost your credit score by paying rent
If you pay your rent on time, you may want to consider reporting your rent payments to credit bureaus, especially if you’re trying to build or repair your credit. Sometimes, it’s a better alternative to using a credit card or credit builder loan. After all, you’re already making rent payments — you might as well be rewarded for them.
If you’ve decided to start reporting your rent payments, check in with your landlord or property manager to let them know. In many cases, you’d pay the rent reporting service instead of the landlord directly, so you’ll want to tell them to expect payments from a third party.
Some services are landlord-enrolled, which have your landlord report the payment to the credit bureaus. You’d still pay rent to your landlord, and they’d report those payments. Unless your landlord has already signed up for one, you’ll need to find your own.
Research different services and determine which is best for you. They have different price points, don’t necessarily report to all bureaus and may have other perks as part of the service. Once you enroll, you’ll want to confirm that your landlord will receive payments; you should also confirm that the first payment has been received and that the payments appear on your free credit report within a few months.
Rent payment reporting companies
Several rent reporting companies can report your rent to different credit bureaus. Here are some that report to at least two of the three major credit bureaus:
- Boom: This mobile app helps you report current and past rent payments to all three credit bureaus. Ongoing reporting costs $2 per month, and past reporting costs a one-time $25 fee. You can use Venmo, Zelle or CashApp, as well as traditional payment methods.
- Credit Rent Boost: You can send rent payments to Equifax and TransUnion through Credit Rent Boost, which offers subscriptions for ongoing and past reporting. Your landlord must verify your monthly payment as part of the service.
- Esusu: As part of comprehensive services to help you build a credit history, Esusu provides rent reporting. If your landlord uses Esusu, you can take advantage of the service; otherwise, they do not currently offer services for independent renters.
- LevelCredit: Unlike many other rent reporting services, you’ll link your bank account to LevelCredit, and it will automatically find rent, cell phone and utility bills to add to your credit profile. There’s a one-time $49.95 cost.
- Rent Reporters: Once you enroll, RentReporters reports up to four years of your rental history to two credit bureaus — that’s a longer timeframe for past reporting than some other services. There are monthly and annual subscription plans.
- PayYourRent: While this is primarily a payment portal system where residents can pay rent and security deposits, properties enrolled in PayYourRent will help renters build credit by submitting payment histories to all three credit bureaus.
Improving your credit score
Fortunately, there are plenty of ways to build a better credit score. While there’s no quick, easy way to get started with a strong credit profile or repair bad credit, practicing good credit habits will help you improve your credit over time.
Making consistent payments on debt is a great way to improve your credit, as payment history is the most important factor in calculating a credit score. For that reason, you need to open those accounts in the first place — but be sure not to open too many accounts too quickly, which can hurt your score.
Once you’re using credit accounts like a credit card, there are a few things to keep in mind. You don’t want your credit utilization ratio to rise above 30%, and you definitely don’t want to fall behind on payments. Over time, consider opening different kinds of accounts — that can help your score.