Pay Your Rent and Build Your Credit!
On-time payments boost score
Experian, one of the three major credit-reporting agencies, began collecting a new set of data at the end of 2010. This previously uncollected information detailed whether rental payments were being made on time. The change is good for renters who need another encouraging checkmark on their credit reports and a small, positive nudge to their overall score.
As a result of this switch, groups that are traditionally restricted access to major credit products (such as displaced homeowners, immigrants and college students) can get a jolt to their score and, perhaps, qualify for better opportunities.
Does it matter?
For people with bad credit (or none at all), their access to purchasing tools such as credit cards and consumer loans, can be seriously restricted. Unfortunately, this causes a cycle: good credit rewards an individual with tools that further increase credit, while someone with bad credit is denied the opportunity to improve it.
This new change, however, provides renters with an easy way to bump up their credit score. By simply paying their rent on time, the Experian credit report will reflect them more favorably. They’ll be more likely to experience an increase in credit (and with in an increase in access to financial tools).
Who sees it?
Once every day, on-time rental payment data is forwarded to Experian RentBureau. Whenever a company that screens a potential tenant accesses the data, they can see whether the applicant has a history of paying his or her rent on time.
After a string of on-time payments, that data can become incorporated into your regular credit report. Your standard credit report is viewable by companies that finance automobile purchases, utility companies and financial institutions such as banks.
Get the credit you deserve!
If your on-time rental payments are not being reported to Experian RentBureau, then you’re not getting any credit for them. By asking your landlord or a representative of your property management company about whether or not they report rental data, you can learn if your credit is being affected.
Supposing that your payments are not being reported, tell your landlord that he or she can help you (and possibly other tenants) by signing up for a rental payment service that does report. Most rental payment services allow tenants to pay their rent online, which is convenient for the landlord. Plus, you’ll be able to opt in or out of reporting for yourself. It’s a win-win and you’ll get the chance to improve your credit.