It’s not every day you get a tip that could rock your credit score. Here’s a little-known secret: Your rent payments don’t affect your credit score.
You heard that right. Credit scores are the most critical factor in your financial life. Not paying your payments on time can affect your credit down the road. Good luck getting a mortgage or a car loan with a bad credit score.
But many of us pay rent, so why doesn’t it count?
Keep reading. This article breaks down if rent payments can go toward your credit score. Hint, hint: they can.
Does Paying Rent Build Credit?
Let’s put this bluntly. No, rent doesn’t help your credit score. But it can.
You know that pesky monthly payment you make so you can have a place to live? Do you know that cost that keeps rising every month? Those rent payments don’t affect your credit score.
Why not? Shouldn’t our credit scores encompass all our payments?
Not exactly. Unfortunately, because landlords don’t lend rent money, banks don’t see rent as a debt. So, when the three major credit bureaus look at all your payments, they’re usually not seeing your rent. Besides a roof, your rent doesn’t give you long-term financial benefits.
Luckily, there are a few methods to get your rent on your credit score.
How to Submit a Rental Credit Report
If you have a good history of paying rent, talk to a rent-reporting service. These companies do just what they promise, sending your rental history report to the major credit bureaus. By paying your rent through these services (and an additional fee), you will help your credit score.
Let’s look at the steps to start reporting your rent.
#1 Talk to Your Landlord
Before you do anything, talk to your landlord or property manager. They may already enroll in a rent-reporting service, making your life much easier. No matter what– they’ll have to approve your rent through the service– so you’ll have to talk to them.
What’s that: You’re intimidated? Have you only talked to them over e-mail? Don’t worry. With a bit of confidence and manifesting, you’ve got this.
#2 Explore Different Rent-Reporting Services
There are many different companies out there. Explore and research to make sure you’re choosing the right one. Consider a few critical questions: Does the company report rent payments to all three credit bureaus? How much do they cost?
A few of the most popular companies include:
Keep in mind that different services will charge additional fees. Most rent-reporting companies will charge anywhere from $10-20 monthly, with an initial start-up fee of around $50.
#3 Subscribe to the Service and Set Up Your Online Account
Once you’ve found an affordable company you trust, set up your account to continue, each rent-reporting program will vary, so follow their steps to ensure you’re setting up your rent correctly. You’ll have to put all your rent and contact information.
As soon as you’re in the system, talk to your landlord to ensure everything works on their end. You don’t want to discover that your rent wasn’t coming through down the road. Most rental companies will request your total rent and then deduct your monthly fee before paying your landlord. Thus, your payments should be simple.
#4 Check in With the Credit Bureaus
There’s no point in reporting rent if the information won’t get to the credit bureaus. Check up with Experian, Transunion, and Equifax to ensure your rent payments come through.
#5 Congrats; You’re Helping Your Rent
If you’ve got this far, you’ve successfully reported your rent payments to the credit bureaus. Congratulations! A lot of people don’t know they can do this. You’re taking a stand for your finances; your wallet – and future self – will thank you.
The Cons of Reporting Your Rent
The benefits of reporting rent are clear, but what’s the downside?
Luckily, the downsides are self-explanatory, and as long as you plan, they shouldn’t have too much effect. First and foremost, the monthly fee will take a bit from you every month, but hopefully, the long-term benefits outweigh the current costs.
The more significant risk: if you don’t pay your rent on time, it’ll hurt your credit score. Before you put in a rental application, make sure that you can afford it. There’s no better method to keeping your credit score high than budgeting and paying off your debts as soon as they come up.
How to Report Rental Payments to Credit Bureau For Free
A few services offer free rental reporting. Sign up for a service like MoCaFi, which provides free reports to Experian monthly. These options are often more limited, so research to ensure you sign up for a reliable service.
Grow with EXTRA
Hopefully, this tip will help you down the road. We know how scary the finance world is and how many things people don’t know. At EXTRA, we aim to help you with your credit history and keep you as financially literate as possible.
To start building your credit early, check out our credit-building debit card. You heard that right: the world’s first credit-building debit card.
Our blog offers all you need about finance, like understanding the different credit score ranges and finding financial independence. Don’t be afraid of getting your feet wet: the more you know, the more you’ll be able to keep yourself safe and knowledgeable.
You won’t regret it.