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New renters may assume that building credit with rent payments is as easy as turning in a check to your landlord every month. Unfortunately, that’s not necessarily the case.
Paying rent on time through rent reporting services can put you in good standing with the major credit bureaus. However, doing so often comes with a fee attached. In this post, we’ll walk you through how paying rent can help you build credit, the top rent reporting services you can use and some frequently asked questions about building your credit through rent payments.
Key takeaways:
You don’t traditionally build credit while making rent payments directly to your landlord, but there are some options that can help you build credit through rent payments.
Firstly, you can pay your rent through rent reporting services that will help build your credit score if you make your rent payments on time. However, these services usually come with service fees, meaning you’ll have to pay your rent and then some every month. You may also report your history of good standing with regard to rent payments to credit bureaus through various rent reporting services.
By taking advantage of rent reporting services, you can increase the number of on-time payments on your credit report. This will likely improve your credit as you continue to make payments by their due date.
There are a few steps you can take to ensure your rent gets reported to the three major credit bureaus, Equifax, Experian and TransUnion.
Your first step for how to build credit with rent payments is to research available rent reporting services. Determine which service is the best fit for you by first determining which credit bureaus a rent reporting company reports to.
For example, some companies may only report to Experian, while others will report to all three. This may be because a rent reporting service is owned by a specific credit bureau—not because one credit bureau is better than the others. Using a rent reporting service that reports to all three bureaus may be the best option because you’ll want all three of your credit reports to reflect your positive rent payment history.
Also research how much your desired rent reporting service will cost you every month. Since most of these services come with a monthly fee, you’ll have to factor that number into your rent payments. Lastly, check to see if your desired service reports not only on your future rent payments but also on your payment history, as this can also impact your credit.
Before signing up for the rent reporting service that’s best for you, talk to your landlord. Sometimes, your landlord will be OK with you paying rent through these services, but some landlords may be hesitant or not allow it at all.
After clearing the rent reporting service with your landlord, sign up for its online portal and make your first payment. This should be a seamless process, and once you pay the service fee for your payment through the online portal, it should go directly to your landlord.
After submitting your first payment through the rent reporting portal, you should ensure that the credit bureaus reported it. You can do this by checking your credit report at least one month after submitting your payment. You should see evidence of the rent payment on your credit report. If not, contact your rent reporting service to troubleshoot.
Now that you know how to set up rent payments through rent reporting services, you can dive deeper into the various options. Whether you’re a tenant or a landlord, there are several services you can choose from. If you’re wondering how to report your rental payments to the credit bureaus for free or don’t mind a fee, the following options can help you get started.
Landlords can use the following rent reporting services to ensure their tenants’ rent payments get reported to credit bureaus:
There are several factors that can affect your choice of rent reporting service, and it all depends on the tenant’s or landlord’s needs. Factors that may affect your decision include the monthly fees associated with the service, which bureaus it reports to and if it can report on past good history with rent payments.
You will also need to clear the rent reporting service with your landlord to make paying rent build credit for you. They may already have one in place, or they may not wish to be part of a rent reporting service at all.
Rent reporting services are worth it if you’re looking for a way to improve your credit score through your regular monthly payments to your landlord. By increasing your on-time payments on your credit report, you can build credit through rent payments within 10 days—depending on the service.
Still have questions? Below, we answer the most frequently asked questions about increasing your credit with rent payments.
Yes, you can potentially increase your credit score with rent payments by signing up for rent reporting services. You have the option to choose free or paid services, or your landlord may have a rent reporting service in place already.
However, if you don’t make rent payments on time, this could hurt your credit, so it all depends on how you use the service.
Rent-to-own agreements are a great way to improve your credit. These agreements are an opportunity for those with low credit to improve their credit in the rental phase before finally purchasing their rent-to-own home.
Your credit will only be affected by late payments if your payments are reported to the credit bureaus. If this applies to you, know that paying your rent late or not at all may impact your credit for a long time, so it’s best to avoid doing so if you can.
Now that you have all the information you need to choose and enroll in rent reporting services, you can start building your credit today. If you need additional help or information—or fear that your credit is too low to rent—look into starting the process of repairing your credit to ensure you have a bright financial future ahead of you.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
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