How to Report Rent Payments to Credit Bureaus
Posted on June 30, 2021 in Money
There are several unwavering financial pieces of advice you should adhere to. For instance, pay off your debts in time, have savings for emergencies, and only spend what you can afford. But when you’re looking into how to report rent payments to credit bureaus, there is another vital piece of financial advice that experts recommend to individuals: Keep your credit score as high as possible!
Credit scores play a crucial part in an individual’s financial health. A good credit score can assist you in landing certain jobs and provide you with endless benefits, such as access to credit cards and loans with favorable terms.
Surprisingly, research shows that around 26 million Americans have no credit history or are “Credit Invisible.” Luckily, you can easily boost your credit score by paying rent on time.
This post provides you with various ways of reporting rent payments to credit bureaus to help improve your credit score.
Does Rent Payment Affect my Credit Score?
Today, rent payments make up the largest expenses for most individuals across the world. Unfortunately, rental payment history does not contribute to most people’s credit reports. Meaning, paying your rent on time won’t affect your credit score.
However, reporting your rent payments to credit bureaus can help change this narrative. Credit bureaus provide credit issuers and lenders with the relevant information needed to make loan decisions.
When you report your rent payments to major credit bureaus – TransUnion, Experian, and Equifax – they add your rent payment data in your credit reports.
FICO and VantageScore Scoring Models for Rent Payment Information
FICO and VantageScore are the commonly used scoring models in the United States. They consider information, such as payment history, new credit, length of credit history, the amount owed, and types of credit to score individuals.
Below are how these two credit-scoring models handle your rent payment history:
- FICO 8, which the most used version of the FICO model, does not include your rent payment history when calculating your credit scores.
- Latest versions of the FICO model, including FICO 9 and FICO 10, incorporates your rent payment information in calculating your credit scores
- VantageScore, an alternative to the FICO scoring model, includes your rent payment information in calculating your credit scores.
Services You Can Use to Report Rent Payments
Over the past decades, the only rental information that would appear on your credit report is bad history, including unpaid rent balances or broken leases. This is because landlords rarely report your rental payment information to credit bureaus unless you’ve defaulted on paying your rent. Once a landlord has completed an initial credit check, he or she is unlikely to perform any additional screening and is unlikely to take the time to report rental payments.
Reporting your rental payment information to credit bureaus can help improve your credit score. As such, you must find a way to get your rent payment history to them.
While there is no direct way to report such information to credit bureaus, there are paid and free rental reporting services that act as neutral, third-party intermediaries. These services verify your rent payments and report the information to credit bureaus on your behalf.
Usually, reporting services are classified into two types: self-enrolled and landlord-enrolled rent reporting services.
Self-Enrolled Rent Reporting Services
These are the rental reporting services you can use regardless of whether your landlord uses them or not. They include;
1. Rental Kharma
Having been in business since 2011, Rental Kharma is a reliable rental reporting service provider that reports rent payment information to the TransUnion credit bureau. All that Rental Kharma needs is to verify both your monthly and lease payments with your landlord.
To start using the service, you’re required to pay a startup fee of $50, after which you only pay $8.95 per month.
2. Rent Reporters
If you want your rental payment information to be recorded by Equifax and TransUnion, Rent Reporters is the service provider for you. The company verifies your rent payments by contacting your tenant each month. You will pay a $94.95 signup fee that covers rent reporting for the last 2 years. In addition, there is another $9.95 monthly maintenance fee.
3. Rock the Score
Rock the Score service reports your rent payment history to TransUnion and Equifax. However, the company only reports your information to Equifax if your landlord is a property manager.
The service has a one-time enrollment fee of $48, and a monthly payment of $6.95. Moreover, Rock the Score has a one-time historical reporting fee, which involves reporting your rental history for the past two years.
LevelCredit helps you build your credit score by reporting your rent and utility bill payments to TransUnion and Equifax. Enrollment with LevelCredit is free, with the only charge being a monthly fee of $6.95.
This rent reporting service reports your rental information to TransUnion and Equifax for a monthly fee of $14.95 and no enrollment fee. The service can also report your 24-month rental history at an additional cost.
6. Esusu Rent
If you’re looking for a rent reporting service to report your rent payment information to all the three credit bureaus, then Esusu Rent is the service for you.
Esusu Rent is free of charge if your landlord enrolls with the service. If not, you’ll have to pay an enrollment fee of $50.
7. Credit Rent Boost
Having been in business since 2016, Credit Rent Boost is one of the most reliable rents reporting services. The service reports your rent payment information to Equifax and TransUnion.
The service charges you a monthly fee of $3.75 for ongoing rent reporting and $2.50 for past rent reporting. If you want to have both continuing and past rent reports sent to the credit bureau, you will pay as low as $2.92 per month.
Landlord-Enrolled Rent Reporting Services
These are some of the best rental reporting services that require your landlord or property management companies to be enrolled with them to report your rental information.
This is a free-of-charge service that debits your rent from your savings or checking account. The service demands your tenant to be signed up with it and reports your rent payment history to Experian.
PayYourRent is a service that reports your rental information to all three credit bureaus. The service allows residents to opt-in to the rent reporting service whenever they want. Your landlord or property manager must also enroll with the service.
eRentPayments is a landlord and property management tool that reports your rent payment information and allows for online rent payments and tenant screening.
Since 2014, PaymentReport has been offering credit reporting services for landlords and tenants. The service reports your rent payment information to Equifax.
To sign up with the company, you’re required to pay an enrolment fee of $49. This amount also covers rental information reporting for the past two years. Ongoing reporting is free for you, provided your landlord is enrolled with the service.
Factors to Consider While Choosing a Rent Reporting Service
Given the wide variety of rent reporting services available, you must consider a few key things before choosing the right one for you. When looking into how to report rent payments to credit bureaus for free or with paid options, there are some of the questions to ask yourself:
How much does the service charge me in a year? The payment amounts vary for the various services. Some require you to deposit an initial deposit, others charge monthly payments, while some services like MoCaFi are free when you use the phone app. If opting for a paid option, make sure to factor the new expense into your monthly budget to ensure you can continue to afford living alone or paying rent with your roommates.
Is rental history included in the service? Some service providers give a history of your rent payments information at an additional cost.
Is my landlord or property manager enrolled in the service? If the landlord is not enrolled, you may consider the efforts he or she has to go through to sign up.
Which of the three credit bureaus does the service report to? A service provider that reports your rent payment information to all three credit bureaus is the ideal one.
Does the service provider protect my personal information? Due to an increase in cases of hacking and data theft, it is vital to consider a service provider that offers data protection.
What happens if I break the lease?
What is the procedure for canceling the service?
Does Paying Rent Build my Credit Score?
Paying your rent can help build your credit score, but only after you actively report these payments to credit bureaus. Consistent reporting of your rent payments improves your credit score on various scoring models. But remember, you must make payments on time each month.
For instance, a study shows that adding your rent payments for two months can increase your VantageScore score by 9 points. Another study by TransUnion shows that credit scores can rise by as much as 16 points after 6 months.
FAQ’s About How to Report Rent Payments to Credit Bureaus
Is Rent Reporting Worth it?
Rent reporting is worth it. Research studies show that reporting your rent payment information enhances your credit score. For instance, a study by Experian in 2020 found out that rent reports helped 100% of previously unscorable individuals to become scorable.
What is the Best Rental Reporting Agency?
The best rental agency differs according to the needs and preferences of various individuals. For instance, if you’re looking for a cheaper option, MoCaFi could be the best option for you. On the other hand, if you want a service that reports your rent payment information to all the three credit bureaus, PayYourRent is the service provider to choose.
Can Reporting Rent Improve Credit Score?
Yes. Reporting rent payments information to credit bureaus can improve your credit score. Various rent reporting services get your rent payment information added to your credit report, which, in turn, helps build credit.
How Do I Report Rent to all 3 Credit Bureaus?
If you want to report your rent payment information to the three credit bureaus, you may choose a rent reporting service that offers you the option. Alternatively, you can select different rent reporting services that report to each of the three credit bureaus.
The Takeaway on How to Report Rent Payments to Credit Bureaus for Free and Paid
Today, you’ll need at least two credit references to build a credit score. With more than 26 million Americans having no credit history, the idea of using rent payment information to create and boost your credit score makes sense. In this post, we give you the best rent reporting services, based on several factors, such as cost and the credit bureaus they report to. Choose the best that fits your needs, and be on your way to fixing your credit yourself. Good Luck!
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