More Tenants Can Now Add Rent Payments to Their Credit Score

More Tenants Can Now Add Rent Payments to Their Credit Score

Reporting negative information could impact tenants, who may want to withhold rent to force landlords to maintain or repair buildings, Ms. Nelson said. If landlords report withheld payments, tenants may feel pressured to pay to avoid damaging their credit. A recent news report suggested this happened in New York City.

Zillow’s service considers payments timely if they are received within 30 days of the due date, said Amy Wipfler, senior product manager for social impact at the company. Payments made thereafter are not reported. The new service will be available to “tens of thousands” of renters, she said.

Currently, Zillow’s service only reports to Experian. If a participant applies for a loan from a lender that uses one of the other credit reporting agencies, the positive rental payments will not be affected. Zillow plans to add the other credit reporting agencies, Ms. Wipfler said. (Other services like Esusu and Self Financial report to all three.)

Here are some questions and answers about using rent payments to improve credit:

No. Only the latest, but not yet widely deployed, versions of credit scoring systems from FICO, the data analytics company, can integrate rental data, said Ethan Dornhelm, the company’s vice president of scores and predictive analytics. The FICO 8 version, an older but widely used model, cannot account for rent, he said. All versions of VantageScore, a scoring model used by the major credit bureaus, are able to take rental payments into account, a spokeswoman, Sarah Cain, said in an email.

That is different. Some services are free for both landlords and tenants, while others may incur one-time or monthly fees. (Some are free for new rent payments, but charge fees for reporting previous rental history.) For consumers who already have top-notch credit, it may not be worth it to have their rent reported, as they’ll likely get additional benefits from an even higher one credit rating, said TransUnion’s Ms. Johnson.

Options for building credit if your credit is poor or poor include opening a “secured” credit card. Typically, you make a deposit and receive a credit limit up to that amount. Your payment history will be reported to the credit bureaus. Some community banks and credit unions offer “credit builder” loans. The money you borrow is held in a bank account while you make payments, which are reported to credit bureaus. Once you have paid off the loan amount, you will have access to the funds.

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2024-01-26 14:00:07