On-time rent payments can now boost credit scores
Rent payments can now boost your credit score
All three credit bureaus are starting to accept rent payments as a form of building credit scores.
HOUSTON - Two-thirds of millennials are "credit invisible," according to Apartment List’s Millennial Homeownership Report. That means they have low credit scores because they often don't bank or use credit cards.
Many tenants fear they won't be able to buy homes and have to rent forever, due to low credit scores.
But now all three credit bureaus and mortgage buyer Fannie Mae accept rent payments toward credit scores and loans.
Rent is usually the biggest bill that tenants pay each month, yet it's not reported to credit bureaus.
"Less than 2% of rent payments are ever reflected in credit reports," said Lily Liu, CEO of the Pinata app for rent reporting.
Liu says most renters don't know they can now use their on-time rent payments to boost their credit score.
"Reporting rent payments month after month can help you build a credit history. That’s important, especially when you want to boost your credit score with those on-time payments," said Liu.
Renters and their landlords can sign up for a variety of rent reporting services.
"Building credit takes time, a lot of time, effort, and diligence. So we like to remind renters it’s about the regularity and persistence of recording those on-time rent payments that get sent to the bureaus," explained Liu.
Credit monitoring and reporting service, Credit Sesame, says on-time rent payments can improve a credit score in as fast as 10 days. Among users of Credit Sesame's rent reporting service, it says people with credit scores between 400 and 500 had the highest average boost of 53 points after one month.
But keep in mind, late rent payments can hurt your credit score. So only sign up for rent reporting if you know you'll pay on time.
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Some rent reporting services charge a fee of about $50 to $100 and/or monthly fees.
Some are free, such as Pinata, which also offers rewards like gift cards.
There are some rent reporting services available:
Credit Sesame
Pinata
LevelCredit
Rent Reporters
Rental Kharma
eRentPayment
PayYourRent
Rock the Score
Esusu Rent
MoCaFi
PaymentReport
These are some services that let users have their utility payments reported to credit bureaus:
eCredable Lift
Experian Boost
ExtraCredit