How To Report Rent On Your Credit Report?
If a major portion of your monthly income goes to your house rent, you might be wondering whether these payments can help you improve your credit score. The answer is YES, as long as the rent payments are reported to the credit bureaus. However, if these payments are not reported, you won’t be able to enjoy an additional boost to your credit score.
So, how do you know whether your rent is being reported? If it is not, how can you report your rental payments to the credit bureaus so they will reflect on your credit report? In this article, we will show you a step-by-step guide on how to report rent on your credit report. We will also discuss the pros and cons of having your rent reported.
Step 1: Check Your Credit Report if Your Rent is Already Being Reported
The first step is to know whether your rent payments are being reported or not. In some cases, property management companies report rent to the credit bureaus so you need to check your credit report first if this applies to you.
Go to www.anualcreditreport.com to request a free copy of your credit report from the three major credit bureaus – Experian, Equifax, and TransUnion. You are entitled to one free copy of your credit report every year so you don’t have to pay anything to get it from this website.
According to Experian, the lease should appear as one of your tradelines in the “Accounts” section of your Experian report. It should list the start date of the lease, the amount of your monthly payment, as well as your payment history for the last 25 months. You can also check your Equifax and TransUnion credit report if you see a payment record that is similar to your monthly rent.
If you cannot find this piece of information in any of your credit reports, you can move to Step 2 to start the process of reporting your rent to the credit bureaus.
Step 2: Ask Your Landlord or Property Management Company Whether They are Able to Report Your Rent to the Credit Bureaus
If you are looking for ways on how to self-report to credit agencies, the sad reality is that it is not possible to report the rent yourself to the credit bureaus. That means you cannot contact Experian or TransUnion yourself to inform them that you have paid your rent.
The good news is that your landlord can do this if they are registered with the Experian RentBureau. If they are already registered, ask them if they can report your rent payments on your behalf.
If your landlord is not registered, you can still refer them to Experian RentBureau so they can register. This way, you will not have to pay any third-party to do the reporting on your behalf, saving you time and money.
However, if your landlord tells you that it is not possible for them to do the reporting or if they refuse to do this, you can hire a third-party agency which is explained further in Step 3.
Step 3: Sign Up for a Third-Party Rent Reporting Service
What if your landlord tells you that they can’t be bothered to do the reporting process for you? What other options do you have? In this situation, you can still have your rent reported by hiring a third-party rent reporting agency.
These companies offer the service of reporting your monthly rent payments to the credit bureaus for a fee or some even offer a free service. The fee will depend on the type of service that they offer. Some companies report to just one credit bureau while others report to two or all three. Some charge one-time fees while others charge monthly fees. There are also different verification processes used by different companies and how involved your landlord needs to be depends on the processes used.
Below is a list of companies that offer rent reporting services. You can check out these companies and decide which one suits your needs best. The companies below are listed based on the fee (free or paid) and the level of involvement of the landlord.
Company Name
Landlord Involvement
Fee
Rent agreement has to be verified and landlord must agree to accept rent payments through the app
Paid
Rent agreement has to be verified and landlord must agree to accept rent payments through the app
Paid
Landlord must agree to sign up for an account and accept rent payments through the app
Paid
Landlord must agree to sign up for an account and accept rent payments through the app
Paid
Step 4: Make Timely Payments
Once you have completed either step 2 or step 3, you have to make sure that you’re making timely payments. If your goal is to increase your credit score, all your efforts will go to waste if you don’t pay your rent on your due date. Instead of the rent reporting being to your benefit, it could become a disadvantage if this happens.
Step 5: If Possible, Pay With Your Credit Card
Another way to boost your credit score is if you pay your rent with your credit card. This can help build your credit history. Just make sure that you are paying the amount in full on your due date. This way, your card’s credit utilization ratio (the amount you use in your card relative to your credit limit) is not maxed out. To improve your credit score, you have to keep your credit utilization ratio below 30%.
How Much Will My Credit Score Improve After Reporting my Rent to the Credit Bureaus?
You may be wondering about whether your credit score increases dramatically after reporting your rent to credit bureaus. How much will your score improve? In an Experian study, the results showed that 75% of the participants saw an increase in their credit score after adding rental history in their credit report.
On average, the increase was around 29 points. Depending on your current credit standing, this number may be lower or higher. It may not be that impactful if your credit score is already good or excellent but for people with bad credit, the increase can be a significant boost.
Is It A Good Idea to Report Your Rent Payments to Credit Bureaus?
One of the topmost questions of people is whether it is even worth it to report your rent to the credit bureaus. The answer will depend on why you want to increase your credit score in the first place and whether you have a good rental history.
For example, if you want to buy a house in the next two years, increasing your credit score even just by a few points can spell the difference between getting qualified for a mortgage and not being considered at all. Let’s say you want to get an FHA Loan, you need a credit score of at least 580. If your credit score is below 580, you can certainly benefit from getting a 30-point increase by reporting your rent payments.
It is also a good idea to have your rent reported if you are trying to increase your credit score to get better deals on future purchases. Let’s say your credit score is at around 760 and you want to have a score of 780 and above to have an excellent credit rating, reporting your rent could be one way to increase your score especially if you have a spotless rent history.
When you have an excellent credit rating, you can enjoy many perks. You can get the best offers when making purchases which will result in a lot of money saved. The savings that you could enjoy can be worth paying the monthly fee charged by rent reporting companies.
Do This Before Reporting Your Rent
If your goal is to improve your credit score, one method you can do is to have your rent payments reported to the credit bureaus. However, this will only be to your advantage if you can be 100% sure that you can make timely payments every time and you have a good rental history.
Before you take this step, consider other methods to increase your credit score that does not involve paying anyone or involving third-parties such as disputing errors on your credit report, building your credit using a secured credit card, or lowering your credit card utilization ratio.
