Rent Reporting: Build Credit History

In this article, you’ll find:

• Why Report Your Rent?
• Misconceptions About Rent Reporting
• How to Start Reporting Your Rent
• Benefits for Landlords
• FAQs

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.

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.

Rent reporting is the process of reporting verified rent payments to major credit bureaus with the goal of building credit history and increasing credit scores.

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.

If you’re looking to improve your credit score and are struggling to qualify for a rental, TheGuarantors can help. They act as a professional lease guarantor, providing financial backing to your landlord for the value of your lease. This service helps renters with thin credit get approved for the home they want more easily.

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 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 many rent reporting services report late payments, TurboTenant’s Rent Reporting only reports your on-time rent payments. But for those who opt to use another service, 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 reporting your rent 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.

For more information on Rent Reporting, visit our helpful support article!

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

Some states are beginning to make this service mandatory. 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 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. You should always thoroughly screen your prospective tenants and run a rental history report, but once you have a solid tenant in your rental, rent reporting is one way to get them to stick around long term.

Though renters cannot report their own rental payments, third-party services like TurboTenant’s Rent Reporting make it quick, easy, and affordable for renters to have their payments reported to credit bureaus. Start reporting your rent today!

FAQs