Rent Reporting: How Paying Your Rent Can Raise Your Credit Score
Step Aside Credit Cards, Rent Reporting Is Here
Building up a good credit score can be a challenging and time consuming feat to accomplish. Most people have to start with a credit card with a low limit and gradually build up a good credit score over a period of time. But what if we told you that paying your rent on time can help build your credit score as well? The problem here lies with the fact that most credit reporting companies do not take rent payments into an account when determining credit scores. In addition, the ones that do take rent into account are generally not the types of credit scores lenders and card issuing companies work with. So one must do their homework when working with a rent reporting service. They must determine which credit bureaus this service will be reporting their rent payments to and which credit scores acknowledge these payments.
Credit Scores That Consider Rent Payments
While it is true that most of the top credit bureaus take rent payments into account when determining credit scores, the issue lies in how these payments are accounted for. Unlike most types of payments that are considered “tradelines”, rent payments are treated differently when calculating most credit scores. It is rare that an algorithm would consider these payments in determining credit scores, but FICO 9, FICO XD and VantageScore all include rent payments as a factor.
How Does Rent Reporting Match Up With Other Credit Types?
Unfortunately, while there are a few lenders that will give loans based on rent reporting, most lenders like to see their customers build credit the old fashion way. That being said, it is not impossible to get a loan without a FICO score. It is possible to get a loan, even a large one, based on rent reporting, but you will most likely be working with a small lender. Rent reporting is also useful if you are looking to rent another property. These landlords like to see that their tenants have the ability to pay their rent on time.
For more in-depth information on rent-reporting and how it can benefit you, contact us today!