4 ways renters can boost their credit scores
Shouldn't you get a little credit for being such a great tenant? Turns out, now you can.
Not too long ago, paying rent didn’t have much to do with your credit score. Not paying rent could (and still can) wreck your credit score. If you were behind enough to have your account sent to a collections agency, your past-due rent would likely be reported as negative information to the credit bureaus.
Rental rates in the United States are skyrocketing because of foreclosures, an unstable housing market, and the general hesitance of younger Americans, especially, to buy homes. While renting can be a good option for many, historically it has not been helpful in building a credit score.
For renters who are rebuilding credit after a foreclosure, or those who are renting until they can afford to buy a house, that’s a problem.
For many of us, rent is the biggest check to hit the bank account every month, and not getting some acknowledgement for paying that important bill on time is frustrating.
Luckily, some of the major credit bureaus are beginning to take rent into account on credit scores.
Experian and TransUnion now allow renters to include their positive payment information in their credit histories, according to the Wall Street Journal. The third big credit bureau, Equifax, does not. Yet. This is a relatively new process.
How to get rent counted in your credit score
Having your rent reported in your credit history is a good idea if you’re trying to repair bad credit, or if you don’t have much credit history. But how do you get it done? Here are four options:
1. Talk to your landlord. According to Experian, you can ask your landlord or property management company to join the RentBureau program. Your landlord has to sign up with a rental payment service that works with RentBureau, and then you can opt to have your rental history reported to Experian.
2. Use WilliamPaid to pay rent. WilliamPaid is one of the services that Experian, in particular, uses. Your landlord doesn’t have to sign up for you to use it. Basically, you use the service to pay your rent with a credit card, debit card, bank account or cash, which is accepted at certain retail locations. WilliamPaid also has an automatic payment option.
The fees for using various WilliamPaid payment options vary. It’s free to have your bank account electronically debited, but it costs 2.95 percent of your total payment to charge it on your card. You can also use a combination of payment methods for a 2.95 percent fee. Also, you can use the service to split rent payments between roommates, tracking who has paid and who hasn’t.
With WilliamPaid, you can have your rental payments reported to Experian. If you’re responsible with your payments and have them drafted from your bank account, it’s an excellent, free way to include rent on at least one of your credit reports. And if you use a credit card, you get the added benefit of having your credit card payments reported to the credit bureaus by your credit card company.
3. Try Rent Reporters. Rent Reporters is another rent reporting service, but it is not free. To get started, you enroll in the service, and the company verifies your information. Then, you’ll get an online account where you can track what information is being reported to credit bureaus.
You can sign up with Rent Reporters for free, and they’ll verify your information. Then, you pay $9.95 a month to have your rental information reported to the bureaus. For an additional $34.95, Rent Reporters can send up to two years of your rental payment information, as well. This could be a good option if you’ve always paid your rent on time and are trying to boost your credit score.
4. Check out Rental Kharma. Rental Kharma is similar to Rent Reporters. Again, you create an online account, but with this service, you’ll pay a one-time $10 fee for reporting up to two years of rent payments.
Rental Kharma provides information only to TransUnion, but Cullen Canazares, the company’s founder, said via email that Rental Kharma hopes to begin working with Experian soon.
One interesting thing about how this service works is that it makes rent appear as a tradeline on your TransUnion credit report. A tradeline is an account, according to Experian. So, essentially, TransUnion treats your rent payments like a credit card account or another installment type loan.
Would you ever use one of these services to have your rental payment history reported to a credit bureau?
More from Doughroller:
- What is your Vantage score?
- How to get your free credit score (with no credit card)
- How long does it take to improve your credit?
So, if you're willing to share the news about their service, you can get free reporting for yourself, your friends and family, too.
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