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  • Yes, Your Rent Payments Can Boost Your Credit Score.

    Jean Chatzky

    You may have heard there’s no way to get your on-time rent payments reflected on your credit history. That’s starting to change — and it’s a good thing. 

    Do you have a good track record when it comes to paying your rent? Nowadays, you can often use your on-time rental payments to boost your credit score. According to an analysis by TransUnion, nearly 41% of subprime consumers saw their VantageScore increase by 10 points or more after just one month of rent reporting — but does it work for everyone?

    Since the practice of including on-time rental payments as part of a credit score is relatively new, only the most modern methods of credit reporting offer the option. For example, the newer FICO 9 and VantageScore scoring systems have been including rental payments for years now, but FICO 8 — one of the most commonly used scoring systems — still does not include rental payments. And — and this is important — you never know which score the lender will turn to when assessing your credit score, and both the FICO 9 and VantageScore are growing in popularity.

    So, does it make sense for you to add rent to your credit report? 

    If you have a credit score of under 650, you’re a good candidate. Subprime consumers with scores below 650 saw a 29 point increase in their credit scores when adding rental payments to their report, according to a study done by RentTrack. It may also be a good option for you if you don’t have a credit history, explains Megan Eals Monroe, a marketing manager for CreditPop. An Experian study found that 100% of previously unscorable consumers became scorable by creating a rent tradeline. “Anyone with few credit lines and a shallow payment history will benefit from this,” says Alex Brola, owner of credit repair company CreditGlory. On the flip side, if you’re someone who has a decent credit score and an already established credit history, it might not be worth your time and effort. “Anyone with a few well-aged tradelines isn’t going to see much benefit from a year or two of positive rental history,” says Brola.

    How to Get Started 

    If you think you’ll benefit from adding rent to your credit score, you’ll need to start by paying your rent through a rental service agency — for example, RentTrack or PayYourRent. These agencies will then pay your landlord, and then automatically report your rent payments to the credit bureaus. These service agencies are essentially creating a paper trail of your on-time payments, which wouldn’t exist if you elected to pay your landlord via other commonly used methods like check, cash, or Venmo. Although rent service agencies are plentiful in supply, make sure to do your research, because they’re not all created equal. (They’re also not free. More on that in a moment.) Some, like ClearNow and Cozy only report to one of the three credit bureaus, and you want to find one that reports to all: Equifax, TransUnion, and Experian.

    Things to Note 

    Including your rent payments to your credit score can give you the boost you need to take out a loan or open up your first credit card, but it comes at a price. Rental service agencies usually charge renters between $6 and $9 per month to use their service. However, this may seem like a small price to pay when it comes to securing the line of credit you’ve been waiting for.

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