Does Paying Rent Build Credit?

If you’re like millions of Americans, you probably rent an apartment or home, and so you might be wondering, does paying rent help you build credit? We will provide you with everything you need to know about whether paying your rent help you raise your credit score.

Does Paying Rent Build Credit?

In most cases, paying rent does not build credit because most landlords and property managers do not report rent payments to the credit reporting bureaus. However, if your landlord does report rent payments to the credit bureaus, then paying rent could help you build credit so long as you make your payments on time. If your landlord does report rent and you miss a rent payment, you could cause significant damage to your credit.

If your rent does not appear on your credit report, making your payments on time or failing to make them will have no impact on your credit. However, if your landlord or property manager reports rent payments to the credit reporting bureaus, then making your payments can actually help you build credit.

That said, in most cases, making rent payments does not build credit because landlords and property management companies do not typically report your rent payments to the credit reporting bureaus because it costs them money to do so. It costs them money to invest in hardware, software, and subscription fees to report payments, so most do not report to the credit reporting bureaus.

That said, if your landlord does not report your rent payments to the credit bureaus, you can still cause damage by failing to pay your rent.

Failing to pay your rent could indirectly ruin your credit score. If you don’t pay your rent in the event that your landlord or property manager sells the unpaid amount of money to a collection agency. The collection agency will then attempt to collect the past due amount from you.

If you fail to pay the collection agency, they may place a collection account on your credit report. A single collection account can cause your credit score to drop by 100 or more points. The higher your credit score, the bigger the drop will be.

So, to avoid having your account sent to collections and damaging your credit, you should make sure to make all of your rent payments on time.

We know that it may have come as a shock to you that paying your rent does not help your build credit, but don’t fret, you’re not alone. According to a survey conducted by Transunion, nearly 50% of renters mistakenly thought that paying rent builds credit. The truth is that very few landlords report payments to the credit reporting bureaus.

Why Doesn’t Rent Build Credit in Most Circumstances?

Making rent payments doesn’t affect your credit score in most circumstances because very few landlords and property managers report your rent payments to the credit reporting bureaus. The credit reporting bureaus do not go out looking at whether you paid your rent or not, it’s up to your landlord or property manager to provide that information to the credit bureaus.

Most landlords don’t want to pay the cost associated with reporting your information to the credit reporting bureaus, so that info does not appear on your credit report. If the property owner provides that information to the credit reporting bureaus, the three major credit reporting bureaus (Experian, Transunion, and Equifax) will include that information on your credit report. If not, then it will not appear on your credit report.

Can You Use Your Rent Payments To Build Credit

As of the time of writing this post, there is no way for you to self-report your rent payments to build your credit. There are some services out there that promise to report your rent payments to the credit bureaus in exchange for a fee, but be very skeptical of these services as many of them do not have a relationship with the credit reporting bureaus. If you decide to pay for a service that promises to report your rent payments to the credit bureaus, be careful and make sure to make all of your payments on time as missing even a single rent payment can cause significant damage to your credit.

Missing a rent payment after using a reporting service can cause damage to your credit because your payment history accounts for 35% of your credit score. If you make all of your payments on time, you will build excellent credit. However, missing even a single rent payment after beginning to report rent payments to the credit bureaus can cause significant damage to your credit.

That said, here are some of the most popular rent reporting services we could find on the internet.

What Are Some Decent Rent Reporting Services

1. Extra Credit

Extra Credit allows you to report your rent payments, utility payments, and even your phone bill to the credit reporting bureaus, helping you build your credit in just a few months. The service charges $24.99 per month.

2. Credit Rent Boost

Credit rent boost allows you to report your previous, current, and future rent payments to Equifax and Transunion for the low fee of $5.95 per month.

3. Rent Reporters

Rent reporters allow you to report your rent payment to Equifax and Transunion. Rent reporters charge a $94.95 signup fee. After paying the signup fee, it costs $9.95 per month to continue reporting your payments to the top credit bureaus.

4. Rental Kharma

Rental Kharma reports your rent payments to Transunion and Equifax. Their website states that the average credit score increase after reporting rent payments is 40 points within the first 10 days of signing up for their service. Rental Kharma charges a $50 fee to join and a monthly fee of $8.95 per month.

5. Level Credit

Level Credit can help you report your rent to Equifax and Transunion. They do not charge a fee to signup for the service, but they do charge a monthly fee of $6.95. They do provide the option to report your current, future, and 24 months of previous rents payment to the credit reporting bureaus.

What Happens If You Miss a Rent Payment?

If you miss a rent payment, not only can your missed payment result in an eviction, but it could impact your credit if your landlord usually reports your rent payments to the credit reporting bureaus.

If the property owner reports rent to the credit reporting bureaus, a missed payment can result in a significant drop in your credit score.

That said, most landlords do not report rent payments to the credit reporting bureaus because it costs a ton of money to do so.

So, if your landlord is like most, then he does not report rents payments to the credit bureaus. In this case, missing a rent payment will have no impact on your credit.

That said, even if your landlord doesn’t report late payments, you should keep in mind that your landlord may sell the outstanding amount that’s due to a collection agency.

The collection agency could cause significant damage to your credit if it reports a collection account to the credit bureaus, causing a collection account to appear on your credit report.

A single collection account can knock down an excellent credit score by 100 or more points. So, not only can missing rent payments lead to an eviction, but it could indirectly result in damage to your credit.

The best thing to do is to always make rent payments on time. If you’re having difficulty making your payments, please contact your landlord and ask them for a solution or alternatives to avoid eviction and damage to your credit.

Frequently Asked Questions (FAQs)

1. Do rent payments build credit?

In most cases, rent payments will not build credit. If your landlord does not report your rent payments to the credit bureaus, your on-time payments will not build credit. However, if your landlord does report your rent payments to the credit bureaus, then making payments will help you build credit. That said, most landlords do not report rent payments to the credit reporting bureaus.

2. How does paying rent increase your credit score?

Paying rent can only increase your credit score if your landlord reports rent payments to the credit bureaus, and you make all of your rent payments on time.

3. How do I get my rent reported to the credit bureaus?

You can get your rent reported to the credit bureaus if it’s not reported by your landlord by paying for a service that reports your rent payments to the credit reporting bureaus. This post provides you with some of the most popular rent reporting services available.

4. Do rent reporting services charge money?

Yes, rent reporting services typically charge you a signup fee and a monthly fee for reporting your rent to the credit reporting bureaus.

5. Do missed rent payment affect your credit score?

Missed rent payments will only affect your credit score if your landlord reports rent payments to the credit bureaus. If your landlord does not report rent payments to the credit reporting bureaus, then missed rent payments will not impact your credit. Most landlords do not report rent payments to the credit reporting bureaus.