For most renters, their monthly rental payment is their most significant obligation and receives priority treatment. If you are starting out and establishing credit, or if you need to improve your credit rating, you should be rewarded for paying promptly. Although most landlords do a credit check when vetting potential tenants, not all follow through by reporting payment history to the credit bureaus.
There are other strategies to build/improve your credit rating; however, given that you are paying your rent diligently, you should receive points on your credit score. The State of California apparently agrees, as they recently passed a bill mandating that landlords of assisted housing developments provide their tenants the option of having their rental payments reported to at least one consumer credit reporting agency.
Reporting Rent Payments to Credit Bureaus – A Win/Win Scenario
Sperlonga Data & Analytics, the credit reporting experts that offer their services to property managers, landlords, and real estate investors, note that their clients typically see a dramatic reduction in late payments, up to 30% in the first ninety days. And tenants paying on time can expect to see up to a 50- point boost on their credit scores. It seems rewarded behavior becomes repeated behavior!
How Does Rent Payment Reporting Affect Your Credit Score
Paying rent on time is an obligation. Doing so on time every time is admirable but won’t affect your credit rating unless payments are reported to the credit bureaus. Unfortunately, you can’t submit payment data directly to the bureaus yourself. But even if your landlord doesn’t currently submit your data, you have options. There are rent reporting services you can employ to ensure your payment history is reported fairly. Yes, there is a cost; however, even the new California law allows landlords to charge tenants for rent reporting. We mention a few of these service providers below.
Another option is to suggest rent payment reporting to your landlord at a negotiated fee. Most landlords who report rental payments to the bureaus have a line item in the rental agreement that charges you a nominal monthly fee. Note, a TransUnion survey confirmed scores do increase after rent reporting is initiated.
TransUnion, Equifax, and Experian, all three credit bureaus include rent payment data in their credit reports if received. In addition, the two major credit scoring companies FICO and VantageScore, have rent payment history in their computations in their most current versions.
What are the benefits of boosting your credit scores by including positive rent payment data in your credit score? Faster and easier approvals, at more favorable rates for mortgages, auto loans, credit cards, and reduced insurance premiums. Having positive rental payment data in your credit report can also be helpful if you rent again. A better credit rating may even help you secure that new position you’ve applied for.
Services to Consider if Your Landlord Doesn’t Currently Report Rent Payments
These services are all available at a fee. Your due diligence should address which bureaus will receive your data, cost/value relationship, security of your data, ability to review scores periodically. Note, most services will need to verify payment with your landlord.
- Rental Kharma – submits data to TransUnion and Equifax, set-up fee of $50.00, plus$8.95 per month, average score increase, 40 points.
- Rent Reporters – submits data to Equifax and TransUnion, average score increase, 40 points within first ten days, two payment plans, monthly at $9.95 or an annual plan at $7.95 per month, plus an enrollment fee of $94.95.
- Credit Rent Boost – ongoing rent reports as low as $3.95 per month, reports submitted to Equifax and TransUnion, an average score increase of 20 – 60 points, and continued increases over time.
There are multiple other services available online for your consideration.
Our Top Recommendation - The Sperlonga Solution
As we’ve mentioned, the Sperlonga system rewards tenants who pay on time with more points added to their credit score and all the benefits that accrue with an improved score. So your positive payment history can really boost your score.
Talk to your landlord. Explain that they benefit from the Sperlonga Solution with a reduction in late payments and outstanding balances. In addition, once credit reporting is initiated, other tenants begin paying down their obligations to qualify for better credit scores and more affordable rates for future purchases.
Recommend the win/win solution from Sperlonga Data, more timely payments, and fewer delinquencies for your landlord - and an improved credit score for you. Your landlord will thank you.