Don’t be the bearer of bad credit.
You can start building good credit from your own home — literally!
Whether the words “credit score” conjure up a sense of pride or makes you cringe, we could all use a little knowledge when it comes to building and maintaining good credit.
If you don’t know much about credit scores and how they work, it can seem daunting to get yourself in the range of good to excellent credit. Building or fixing credit can be easy and painless if you know some savvy tricks, like learning how to report rent payments to the credit bureau.
The good news is that if you’re late to the game, you’re not alone. The Consumer Financial Protection Bureau estimates that 26 million Americans are credit-invisible, meaning they have no credit history. It’s better late than never!
Whether you are a first-time credit owner looking for how to raise your credit score fast or looking to fix bad credit, your landlord might be the ticket.
Learn how to report your rent payments and reap the benefits of being a good tenant!
Why Do I Need Good Credit?
Good credit may seem like something you can put off until you’re older and wiser. You don’t need good credit if you don’t want to buy a house anytime soon, right? Wrong.
Good credit allows you to feel secure that if you ever land in a bad spot, you can rely on things like securing cash loans with much better interest rates. It allows you to find the best personal loans out there.
You can also apply for better credit cards with more perks and feel confident in making big purchases responsibly. When you have bad credit, it starts to impact every aspect of your financial life.
The harsh reality is that in the U.S., it seems like nearly everyone checks your credit. This means that to grow your family or business, you will very likely need a great credit score at some point.
What Are The Downsides of Bad Credit?
Bad credit can land you in some other pretty unattractive situations, like not being able to secure a mortgage on a house, having difficulty renting, getting a car loan, starting a business, or even getting a new cellphone.
Even further, other parties may check your credit like landlords and even employers, so being credit invisible can actually hurt your chances of getting your dream job or that swanky new apartment.
Credit scores can be painfully slow to accumulate so it’s always best to start as early as you can and keep up good credit habits throughout your young adulthood. You don’t want to find yourself playing catch-up.
Anytime you loan money from a bank, this activity is tracked. But credit cards and loans are not the only way to prove that you’re financially responsible.
When it comes to rental reporting for your credit score, it’s also beneficial to you if you plan on renting for many years to come.
If you move, it’s attractive to your next potential landlord to see a robust history of on-time rent payments. You may beat out the competition for a top notch apartment!
All of this requires that you pay your rent on time and are a great tenant. If you already have those two things down pat, start reaping the benefits!
Make 100% of Your (Rent) Payments On Time
You’ve likely been lectured before on making your credit card payments on time in order to avoid the bad credit demons.
However, this adage goes beyond your credit card purchase payments. Repayment of loans, bill payments, and even rent payments count towards a good credit score.
Rent is likely the largest bill you pay and it comes reliably every month. If you’re a responsible renter, think of this as the single best opportunity for your credit. It shows that you’re responsible enough with your money to make huge rent payments on time over long periods of time. And you don’t have to think about it!
Renting instead of owning comes with its obvious advantages, but it is often compared with flushing money down the toilet. You can, however, make that money work hard for you in the form of credit. In general, the less credit you have, the more you will benefit from reporting your rental payments.
Considering that 35% of your credit score is based on your payment history, rent can seriously boost your score over time. The issue is, most of the time rent payments are not reported as something that can contribute to your credit score automatically.
Check With Your Landlord First
To get started with reporting your rent to the credit bureau, first check with your landlord. He or she may already be reporting it (if so, give them a high five!).
Even so, make sure you’re cross-checking with other credit bureaus since the major ones don’t talk to each other and your rent payments may only be reported to one of them. Your credit score will not fully reflect these payments depending on where it’s reported.
Another easy way you can immediately start building credit through your rent payments is by asking your landlord if you can use a credit card to pay rent. While there may be a small fee associated with this payment method depending on your landlord’s rules, the benefits of paying such a huge balance every month (and remembering to pay it off in full!) will contribute to better credit.
If you have a good credit card with perks, this also means more benefits and cash back faster. Win-win!
If you aren’t in the lucky position of having your landlord reporting your rent already or don’t have a strong enough credit line to foot the rent bill each month, you still have some options. This is where rent reporting services come in.
How To Report Rent Payments To The Credit Bureau
The fact as it stands is that less than 1% of credit files have any information on rental payments. Unfortunately for most, it takes a bit of work to get your rental payments incorporated.
The good news is that all three credit bureaus —Experian, TransUnion, and Equifax — will include rent payment information in your credit report once they receive it.
Your rent payments will show up on your credit report as a “tradeline,” similar to how mortgage or car payments are reported.
To get started, you cannot report your rent payments to the bureaus on your own. You will need the help of an outside reporting agency for this.
Third-Party Rent Reporting Resources
There are a number of third-party companies that you can sign up for that will report your rent payments to the bureaus for you. Here are some of the most popular services:
- PayYourRent allows you to actually pay your rent through the service so it’s streamlined and will report each payment without you needing to think about it. They report to all three bureaus.
- Rental Karma allows you to add up to 24 months of past rent payments to help boost your credit history fast. It may take up to 2 weeks to see your score change, but signing up is easy and offers a money back guarantee — plus, it’s one of the cheapest!
- Rent Track offers the option to pay your rent online through the service directly, reports to all 3 bureaus and will alert you immediately with any major changes in your credit.
- Rent Reporters reports to Equifax and TransUnion. Changes to your score happen in as little as 10 days and they can obtain your rent history from your landlord for you.
- Rock the Score also allows up to 24 months of rental payment history reporting and you’ll continue to pay your rent to your landlord as you have been. They will contact your landlord for you.
A good thing to note is that you can’t get your entire rental history to the credit bureaus on your own either. Even if your rent reporting service offers 24 months of payment history, you’ll need to get your landlord involved for anything beyond that time frame.
It’s possible to report as many past payments as you’d like, as long as your landlord is willing to report them his/herself. Don’t be afraid to ask!
Questions You Need To Ask
Like anything dealing with credit, you should be cautious with your personal information to avoid identity theft. While the majority of rent reporting companies are safe and widely used, it’s good to ask a few questions before diving in.
First, make sure your landlord is not already reporting your payments to one of the bureaus — you don’t want to be double reporting and making things confusing for both of you.
You should also do a thorough check to see how/when these companies will be using your personal information and how well it is secured. All of this information should be readily available on each of their websites. If you aren’t seeing it or it’s super hard to find, that’s a red flag.
You also should make sure you know which of the three (or ideally, all three) of the bureaus the company reports information to. This can clarify where your payment history is going and how well it will affect your score. If they report to all three bureaus, you’ll see the most benefit to your score but it may come with a higher monthly fee.
Lastly, make sure you know their cancellation policy ahead of time so you don’t wind up paying hidden fees or stuck in a contract you don’t want to be in.
It’s also important to be your own advocate when it comes to your credit score. Be engaged, check it often, and make sure everything’s looking good. Sometimes, mistakes in credit reporting are never caught and can negatively impact your score.
Check Your Credit Score Often and Make Sure It’s Accurate
If it seems like you’re doing everything right and you still have a mediocre score, or if you’ve started reporting your rent payments and you’re not seeing a change, it’s time to do some digging.
Sometimes, there are inaccuracies in your credit report that can be disputed and corrected.
You’ll want to regularly check and make sure your personal info, account payments, credit inquiries, and new credit accounts are all accurate. If you see any inaccuracies, you can file a dispute with each credit bureau to have your score adjusted. Best of all, you can do this on your own for free!
Make sure you stay in regular contact with both your landlord and your rent payment reporting service to make sure each of your rent payments is being submitted and updated. The extra time you spent keeping track of this will pay off in the future.
Final Thoughts On Reporting Rent
Now that you know how to report rent payments to the credit bureau, there’s no excuse to let it slide!
While reporting your rent can be a great way to boost your score, it’s not the only thing you should be doing to get your score high and keep it there.
Traditional methods of credit building, i.e. using a credit card responsibly and paying off loans quickly, are key to building good credit along with rent reporting.
Rent is a simple fact of life and one that many of us cannot avoid, so make it work for you a little! With these quick and easy steps, you’ll be on your way to a great credit score fast.
If you need more advice on credit building, which credit card is right for you, and much more, be sure to check out our blog.