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When determining your credit score, your payment history is the most important factor. It accounts for 35% of your score and considers your credit cards, mortgage, debt, and other loan repayments.
Paying your bills is one of the best ways to build your credit score. However, rent payments do not typically reflect on your credit reports. If you want your timely payments to reflect and build credit, you need to report your rent payments through your landlord or a third-party rent-reporting services provider
So, does apartment rent build credit?
Here’s how apartment renting can help boost your credit score and how reporting rent payments benefit you.
- Does Renting an Apartment Build Your Credit?
- Benefits of Reporting Rent Payments
- How Credit Karma Rental History Works
- How to Report Rent Payments to Credit Bureau
- Credit Bureau Services for Tenants
- June’s Approach
Does Renting an Apartment Build Your Credit?
Renting an apartment can help you build your credit score. But it depends on whether your landlord or property management company reports your rental payment history to the credit bureaus—Equifax, Experian, and TransUnion. If they do, your on-time rent payments can positively impact your credit score.
However, not all landlords or property management companies report rental payments. However, there are rent-reporting companies that can get your rent payments reflected on your reports.
If you use a rent-reporting service, ensure you know which credit bureaus your payments will be reported to. These services can help you establish a credit history and improve your credit score over time.
Benefits of Reporting Rent Payments
- Helps Establish and Build Credit History
- Improves Credit Score
- Better Loan Terms
- Lowering Security Deposits
- Qualifying For Loans And Credit Cards
- Easy renting Future Properties
Helps Establish and Build Credit History
If you’ve never had a credit card or a loan, your credit history is limited. But building one is important as you need it to determine your credit score. Lenders consider your score as one of the most important factors before qualifying you for a loan.
Reporting rent payments can help you establish your credit history and boost your score. It is the easiest way to build and grow credit without debt.
Improves Credit Score
Does rent affect credit score?
Yes. Rent payments made on time and reported consistently over time can boost your credit score, especially if you have a limited credit history or a low credit score. On-time rent payments demonstrate responsible financial behavior and can help improve credit utilization and payment history, two major factors that affect credit scores.
Better Loan Terms
If you have a good credit score and rental payment history, you may be able to qualify for better loan terms, such as lower interest rates and higher loan amounts, when you apply for mortgages, car loans, or personal loans.
Lowering Security Deposits
Some landlords and property management companies may require higher security deposits for tenants with low credit scores or limited credit history. By reporting rent payments, you can demonstrate your financial responsibility and potentially lower the required security deposit amount.
Qualifying For Loans And Credit Cards
A good credit score is essential for qualifying for loans, credit cards, and other financial products. Building a positive credit history through reporting rent payments can increase your chances of getting approved for loans and credit cards with favorable terms and rates.
Easy renting Future Properties
When you apply to rent a new property, landlords often check your credit history to evaluate your financial responsibility. A positive rental payment history on your credit report can help you stand out as a responsible tenant and increase your chances of getting approved for the property you want.
How Credit Karma Rental History Works
If you have used a rental reporting service, you can find your rental history using Credit Karma.
Here’s how it works.
- Step 1: Log into your Credit Karma account or create one. After logging in, you’ll see your TransUnion and Equifax scores.
- Step 2: Click on “Credit Health” to view your credit report. Here you’ll see the “credit factors,” the 6 major factors affecting your credit score. These are your payment history, credit card use, credit inquiries, credit usage, the average age of credit, derogatory marks, and total accounts.
- Step 3: Next to credit factors, click “Credit Report” to view your full report. Navigate to “Other Loans” on your report and look for your rental payment history. This may be displayed under different names depending on the reporting service you used.
Landlords or property managers use rental history to evaluate your reliability and trustworthiness. When you apply for a rental property, the landlord will often request your rental history.
This may include your previous addresses, the names and contact information of previous landlords, the length of time you have lived at each address, and your payment history, such as whether you paid rent on time.
How to Report Rent Payments to Credit Bureau
Since you can’t report the rent payments yourself, the only way is through your landlord (property manager) or rent reporting services.
Using a Rent Reporting Service
First, you need to choose a rent reporting service. Most providers charge a one-time fee that includes your history (some offer a look-back of up to 24 months on your current lease) and a monthly fee.
When choosing a service, compare their fees and the credit bureau they report to. Additionally, some may require you to verify your rental payment history by providing proof of payment, such as copies of rent receipts or bank statements. Others need your landlord to verify your payments.
It’s important to note that not all credit bureaus include rental payment data in their credit reports, so be sure to check which credit bureau your rent reporting service is working with.
Here are popular rent reporting services, their fees, and the credit bureaus they work with.
| Rent Reporting Service | Initial Set-up Fee | Monthly Charges | Credit Bureaus they Report To |
| Rental Kharma | $75 | $8.95 | TransUnion, Equifax |
| Rent Reporters | $94.95 | $9.95 | TransUnion, Equifax |
| Credit Rent Boost | $2.70/month for past rent reporting | $4.08 | TransUnion, Equifax |
| Payment Reporter | $40 – $60 | $4.95 | TransUnion, Equifax |
| LevelCredit | $49.95 (optional) | $6.95 | TransUnion, Equifax |
| Rock the Score | $48 | $6.95 | TransUnion, Equifax |
Check their websites for up-to-date charges and more information, as these may be outdated by the time you’re reading this.
Also, some providers can include your spouse or roommate at an added cost; others require any other person to create their individual account and pay the subscription fee. So, be sure to ask the provider you’re considering how they report payments when living with roommates or a spouse.
Reporting Done by Landlords
Landlords and property managers can opt into a rent reporting service where your payments will be reported. Sometimes, you’ll be automatically enrolled when you sign the lease.
They include;
- PayYourRent
- Bilt Rewards
- ClearNow
- Rent Dynamics
- Esusu
- Jetty Credit
Most providers don’t charge you as a tenant, but your landlord must have signed up. While others allow you to opt in or out at any time, others enroll you automatically as long as the landlord has a service agreement with them or you live in one of the participating properties.
Credit Bureau Services for Tenants
Credit bureaus provide several services for tenants to help them establish and improve their credit history. Here are some of the credit bureau services available for tenants.
- Credit reports: Credit bureaus provide credit reports that show your credit history, including your payment history, credit accounts, and other financial information.
- Credit scores: They provide credit scores that indicate your creditworthiness. Your credit score is calculated based on your credit history and can be used by potential landlords or lenders to determine if you are a reliable borrower.
- Credit monitoring: Credit monitoring services alert you to any changes or updates to your credit reports. This can help detect identity theft or errors in your credit report.
- Dispute resolution: If you need to dispute errors or inaccuracies in your credit report, the dispute resolution process for tenants can help correct mistakes that may negatively impact your credit score.
- Credit education resources for tenants to learn about credit scores, credit reports, and how to establish and maintain good credit.
- Fraud alerts: Credit bureaus provide fraud alerts that can be placed on your credit report if you suspect fraud or identity theft.
- Credit freezes can be placed on your credit report to prevent identity theft and unauthorized credit inquiries.
- Pre-approval checks: Pre-approval checks allow you to see what credit products you may qualify for without impacting your credit score.
- Score simulators: Score simulators allow you to see how certain actions—such as paying off debt or opening a new credit account—may affect your credit score.
June’s Approach
We have recently entered into a new agreement with Esusu for monthly credit reporting. Under this arrangement, all tenants who pay their rent on time will have their rental payment history reported to Esusu on a monthly basis, which will help improve your credit score over time.
Make Your Rent Count
Paying rent on time is not only important for maintaining a good relationship with your landlord, but it can also help boost your credit score.
While your rental payment history isn’t typically reported to credit bureaus, reporting rent payments to credit bureaus can help establish a positive credit history and potentially boost your credit score.
Research rent reporting services or speak to your landlord about reporting your rent payments. With little effort, you can turn your rent payments into a valuable tool for building your credit and achieving your financial goals.
Remember, every payment counts, so make sure your rent payment is one of them.
