If you’re a renter, there’s a good chance that you’ll hope to buy a home in the future. But in order to buy a home, you have to have two things: a down payment, and good credit. So, every month, you sock away some money for your down payment and pay your rent on time to improve your credit.
Sounds like a good plan, right? Not so fast.
Your rent payments may not be helping your credit in the way you thought it would. But services like RentReporters is changing that.
Does Paying Rent Help with Credit?
We know that mortgage payments are a powerful way to build credit. In fact, the Federal Housing Administration’s (FHA) handbook says that housing payments – along with utility payments – are the most important things mortgage lenders look at when checking a borrower’s creditworthiness.
Do rent payments affect your score the same way?
Late rent payments and eviction can be devastating to your credit. By that logic, paying your rent on time should help your credit score.
But for many renters, this isn’t the case.
Credit bureaus only recently (in 2011) began incorporating rental history into credit reports and scores. Unfortunately, many landlords and apartment communities still do not report rent payments to the credit bureaus.
Some landlords do report to the credit bureaus or use a service that will do the reporting on their behalf. But the key word here is “some.”
You may be paying your rent on time, but the three credit bureaus (Experian, TransUnion and Equifax) may not know about it.
How to Report Rent Payments to Credit Bureaus
Your landlord isn’t reporting your rental history to the credit bureaus. Now what? Here’s the good news: You can report your payments through a service like RentReporters.
A rent-reporting service is the only reliable way to report your payments to credit bureaus.
RentReporters will report your payments to TransUnion and Equifax for you, so you can start building your credit while you’re renting.
Is RentReporters a Credit Repair Service?
To be clear, RentReporters is not a credit repair service.
They are a rent-reporting service that can help you:
Establish your credit
Rebuild your credit
Become a homeowner
By paying your rent on time and reporting your payments to the credit bureaus, you can rebuild your credit over time. RentReporters can help you improve your score while you’re working with a credit repair service on other issues.
The process is simple and straightforward. Here’s how it works:
RentReporters reports your payments to TransUnion and Equifax.
You receive a new tradeline on your credit report.
Your score changes within 10 days.
Let’s go over the entire process in more detail so that you can see just how easy it is to use this service.
Sign Up for an Account
When creating an account, RentReporters will ask for basic information about your landlord and your lease.
Be prepared to provide the following information:
Social Security Number
Date of birth
Landlord’s contact information
You’ll need to pay a sign-up fee, and you’ll have the option to pay a monthly subscription fee. These fees are a small price to pay to increase your credit score. Your sign-up fee also entitles you to quite a few benefits, such as:
Free credit score: You get free access to your TransUnion score before and after reporting so that you can see the difference in your score.
Personal dashboard: Your dashboard is where you can view your score, manage your account and view credit tips.
Personal credit specialist: Your credit specialist will assist you on your journey to improving your credit score.
24 months of rent history: RentReporters will report up to 24 months of rent history.
The monthly subscription will allow RentReporters to verify your rent payments and update your credit every month.
RentReporters Verifies Rent Payments
Once you’ve created an account, RentReporters will contact your landlord to verify your rent history.
The company will work directly with your landlord to verify their identity and to confirm on-time rent payments over the last 24 months.
What if your landlord doesn’t want to cooperate? RentReporters says that they rarely come across uncooperative landlords, but if this does happen to you, you will receive a refund within 30 days. Because RentReporters won’t be able to verify your landlord’s information or your rent history, the company won’t be able to report your payments to TransUnion or Equifax.
Report Rent Payments to TransUnion and Equifax
After RentReporters completes the rent verification process, they will begin reporting your rent payment history to TransUnion and Equifax.
Your rent payments should appear as “RR/Residence.”
Every month, RentReporters will contact your landlord to verify that your rent payment and update your credit report.
RentReporters is the first company to report 24 months of rent history to Equifax and TransUnion. Reporting 24 months of rental history can have a significant impact on your credit score.
How Long Will It Take for My Score to Change?
Score changes can happen quickly. Within 5 days of your landlord validation and rental verification, a new tradeline called “RR/Residence” should appear on your credit report.
Within 10 days, you should see a change to your credit score.
How Much Will My Credit Score Increase?
According to RentReporters, the average credit score increases 40 points in 10 days of using the service. But increases can range anywhere from 35-50 points in many cases.
How is it possible to see such a dramatic increase in your score?
RentReporters impacts the things that matter most with your credit score:
Payment History: Payment history has a high impact on your score. On-time rent payments will demonstrate a positive payment history.
Type of Credit: Having a variety of credit types can be beneficial. Rent history will add a new type of credit, which will be viewed similarly to a mortgage.
Age of Credit: The age of your credit is important – the older, the better. With up to 2 years of rent history, your credit age will increase.
With RentReporters, you can finally get the credit you deserve for making your rent payments on time. Whether you’re trying to establish credit, rebuild bad credit or prepare for homeownership, RentReporters can help you reach your credit score goals.