Paying rent is a common and recurring cost of living, but did you know it has the potential to do more for your finances than leaving a dent in your bank account? Fortunately, by signing up for rent reporting with credit control, you can build credit with rent reporting and gain recognition for your long-term renter status. Below is more on how renters can build credit with rent payments.
What Is Rent Reporting?
Rent reporting is when your regular monthly rent payment is reported to major credit bureaus. Consequently, potential lenders can see whether you have a good track record of paying your rent on time. In turn, they can also see if you are a responsible loan candidate of any kind. Rent reporting will appear on your credit reports, making it easier for potential creditors to see your reliability as a rent-payer.
Rent reporting adds a consistent history of payments to your credit profile. For those who have not built or improved their credit score, the score will undoubtedly improve with this service.
How Rent Reporting Impacts Credit Scores
Your payment history is one of the most significant factors in most credit scoring models, from FICO Score and VantageScore. Adding positive trade lines to this factor is what will help you demonstrate you can be a responsible credit consumer.
Being able to make your rent payment on time each month is no longer just a chance to meet your obligation. It also allows you to take advantage of an opportunity to impact your credit score. But only if you regularly pay your rent. Remember, late payments and missed payments can also be added to the reporting updates and could drive your score down.
Who Can Benefit From Rent Reporting?
Rent reporting is often marketed to those without a credit score as a way to help them establish their first credit, but renters with bad credit can benefit just as well. By showcasing a clean payment history on your credit report, renters who might have an average credit score can have their score increased, opening up more access to a lower interest rate on loans and better credit card options.
For others, it can be an even bigger benefit and lead them to reach their long-term financial goals of homeownership, or help them qualify for a business loan to start a company faster.
Things to Know Before You Start
Check to see if your landlord or property manager already provides this service before deciding to sign up. Not all services report to one credit bureau (and not all to the same bureau), so be sure to find a service that best fits your needs.
Costs can vary; some landlords include this as an add-on to their rent service for tenants; other landlords have the tenant pay the cost. Know what you’re signing up for and what’s promised.
Why Rent Reporting Is Worth Considering
Tenant reporting helps provide more equitable resources to renters who are already putting in the effort and discipline to make timely rent payments. It provides a simple way to proactively improve your finances – without having to use debt or open new credit.
If you want to improve your credit score, consider how tenant reporting is the easiest way to take the work you’re already putting into making your monthly payments and turning it into a foundation for future financial health.
