Rent reporting can improve your renters credit score by adding positive payment history to their credit report. Traditionally, rent payments were not included in credit reports unless they were in collections or resulted in an eviction. However, with the advent of rent reporting services, you can now offer the benefit of rental payment reporting to the credit bureaus, to your residents.
Here’s how rent reporting can benefit your renters credit score:
- Payment history: Rent reporting allows on-time rental payments to be documented and reported to the credit bureaus. Payment history is the most crucial factor in calculating a credit score, so having a consistent record of paying rent on time can positively impact creditworthiness.
- Credit mix: Including rent payments in credit history can diversify the credit mix. Lenders like to see a variety of credit types, and adding a positive rental payment history can demonstrate responsible financial behavior beyond credit cards and loans.
- Credit utilization: Rent reporting can indirectly affect the credit utilization ratio. Although rent payments are not considered in the calculation of credit utilization directly, having a positive rental payment history can free up available income to pay off other debts. This, in turn, can help lower the credit utilization ratio, which is the amount of credit being used compared to the total available credit.
- Building credit history: If your resident is new to credit or has a limited credit history, rent reporting can help establish a positive credit history. By consistently paying rent on time and having it reported, your renter can demonstrate the ability to manage financial responsibilities and build a solid credit foundation.
- Potential credit score boost: By adding positive rent payment history to at credit report, residents may see an improvement in your credit score over time. This can make it easier for your residents to qualify for better loan terms, lower interest rates, and higher credit limits.
To leverage rent reporting effectively, your resident should ensure that their rental payments are consistently made on time and that you, as the Property Manager, choose a reputable rent reporting service that can accurately report your residents’ payments to the credit bureaus.
How CredHub Can Help
CredHub works with property management companies to offer rent reporting to their renters by setting up, maintaining, and streamlining the process. We report full or positive-only reporting to all three credit bureaus — Equifax, TransUnion, and Experian.
Most property managers offer this new renter benefit during move in or lease renewal.
You can schedule time with our team online or learn more by calling (833) 888-2733.
