Rent – it’s one of the largest bills you pay every month. Unlike credit card or mortgage payments, paying rent generally does not get reported to credit bureaus, making it feel useless for financial goals like buying your first home. But, unbeknownst to many renters, as of roughly 2014, major credit bureaus (TransUnion, Experian, and Equifax) began incorporating verified rental-payment data into credit reports when it’s provided – now known as rent reporting.
Reported on-time rent payments can build credit history, and ultimately, raise credit scores. While renters cannot report their own payments, there are rent-reporting services that will track and report rent payments to the credit bureaus easily, and not just easily, but for free. In this blog, we’ll guide you through everything you need to know about rent reporting to decide whether it’s the right credit-building option for you.
Why Report Your Rent?
Credit plays a crucial role in your life. It can open doors to exciting opportunities like securing a loan for a new car or your first home. But for those opportunities to occur, you need established credit history and a good credit score. Based on your credit reports and credit scores, lenders will determine the likelihood of you repaying a loan.
Generally, to build credit, a person must secure a credit card or a loan (car or student loan), both of which require taking on and paying off debt – something not everyone can do for one reason or another. The benefit of reporting rent payments to build credit history is that it does not require adding debt, making it a valuable credit-building option for those with a low credit score or no credit history. It is important to note that if you already have a good credit score or established credit history, adding rent payments to your credit report may not significantly impact your score, and simply, may not be worth it.
Misconceptions About Rent Reporting
You might have a few concerns about adding rent payments to your credit report, seeing that credit scores can affect many aspects of your life. Let’s address some of the most common concerns people have about reporting their rent so you can make an informed decision:
- ‘I don’t know how to report my rent payments to the credit bureaus.’ – Thankfully, rent reporting is something you don’t have to do alone, and truthfully, can’t do alone as a renter. But there are many services out there that, in conjunction with your landlord, will easily collect, compile, and report your verified rental-payment data to the credit bureaus monthly. For more information on how to start reporting your rent, head to the next section.
- ‘My credit information won’t be secure.’ – In order for companies like TurboTenant to get certified to report your rent, they go through a strict verification process to ensure each credit bureau’s requirements are met. Additionally, if your thought is that you don’t want the credit bureaus to have your credit information, the reality is they already have it, if you have a credit card or loan. Reporting your rent payments is your chance to ensure positive information is shared with the bureaus.
- ‘I shouldn’t sign up because I don’t always pay rent on time.’ – While late payments can be reported, there are a few things to keep in mind. Generally, many landlords build a grace period into your lease agreement, which allows you to pay your rent within an allotted amount of time before you are charged a late fee. Additionally, many landlords will not report late rent until it is 30-days past due. If you are interested in reporting your rent, communicate this with your landlord to ensure you are aware of any grace periods and late fees.
How to Start Reporting Your Rent
If you have decided rent reporting is right for you, let’s take a look at how you can do this. Third-party reporting services, like TurboTenant’s Rent Reporting, make reporting your rent payments extremely easy. Simply start by inviting your landlord to collect rent online. Once you’ve securely connected your bank accounts, you will have the option of opting into Rent Reporting.
No matter how you pay your rent – debit card, credit card, or bank account – once you enable Rent Reporting, rent payments made through TurboTenant will be automatically reported. And, just as easily as you turn it on, you can also turn it off with a simple click, if needed.
Learn more about paying rent online with TurboTenant, plus how Rent Reporting can help you reach your financial goals.
Benefits for Landlords
Landlords, not only can renters benefit from reporting their rent payments, but you can as well. How exactly can you benefit from it? Here are just a few ways:
- Reduce late rent payments by incentivizing on-time payments
- Stand out from your competition so you can secure the best tenant possible
- Creates a positive landlord-tenant relationship by helping your tenant reach their financial goals
While this is an optional feature you can offer your tenants, states are beginning to make it mandatory for landlords. For example, California just passed a law, SB 1157, that requires operators of subsidized multifamily units to provide the option for tenants to have their rent payments reported to a major credit bureau. It’s one of the first laws that allows renters to build their credit history through their rent payments.
Rent reporting is an incredible tool for building credit history and boosting credit scores without having to take on additional debt. While it can benefit most everyone, it is especially helpful for renters who lack credit history and renters with a low credit score. Though renters cannot report their own rental payments, third-party services, like TurboTenant’s Rent Reporting, make it quick, easy, and free for renters to have their payments reported to credit bureaus. Start reporting your rent today!
Who is Rent Reporting good for?
Rent reporting can benefit everyone but is especially helpful for renters who lack any credit history and renters with a low credit score. You’ll build your credit history without taking on additional debt.
What is an acceptable credit score for a renter?
While acceptable credit scores vary from landlord to landlord, generally a good credit score to rent an apartment ranges from 620 to higher. For our landlords, read here for our comprehensive guide on how to run a credit check. For tenants, read here for how to pass a rental credit check.
How much can I expect my score to increase?
TurboTenant cannot control or guarantee a particular change in your credit score. However, scores typically increase the most for renters who lack credit history or have low scores. Once you have a consistent history of on-time payments, you can check your credit score for free here.
I’m a renter, how can I start paying rent online to report my rent?
To pay your rent online with TurboTenant, you will first need to invite your landlord. From there, they can create a free TurboTenant account, and within minutes, set up online payments. Then, you will receive an invite from your landlord, and can safely and securely connect your bank account within TurboTenant. Once you start paying rent online, you’ll have the option to start reporting your rent for free!
What is TransUnion?
TransUnion is one of the three trusted credit bureaus that are responsible for collecting and maintaining consumer credit reports in the U.S. These reports are then provided to subscribers, such as landlords, mortgage lenders, etc., who decide whether or not to extend you credit or accept you as a tenant.
How do I check my credit score?
The Federal Trade Commission entitles everyone to a free credit report every 12 months, which can be requested here. TurboTenant reports credit to one of the three major credit bureaus. For more information on getting your credit report, you can visit the Federal Trade Commission’s website here.