Reporting your on-time rent payments may help you raise your credit score, especially if you have bad credit or none at all. Online rent reporting services can help you get monthly rent payments reported to the credit bureaus, but for a fee. Some companies charge a monthly subscription, while others charge a one-time fee. Also, not all of the services report to all three bureaus.
Here's what you should understand about how to report your rent payments to improve your credit score.
TransUnion, Equifax and Experian accept rent payments when they're reported.
However, there are hundreds of different credit scoring models (not to be confused with the actual credit bureau) that lenders use to determine a person's creditworthiness. FICO 8 happens to be one of the most popular credit scoring models, but unfortunately, it doesn't consider rent payments.
Many newer credit scoring models take rent payments into consideration when calculating your score, but they're not as commonly used.
Compared to paying your bills on time and lowering your overall credit card debt, rent payments don't have that big of an impact. Only 1 percent of reports take rental payments into consideration. Maybe that's the reason only 0.3 percent of renters are reporting this.
But don't let that deter you from reporting your rent to increase your credit score. Your rent payment is probably the biggest payment you make each month. Why not show you're paying it on time? Plus, on-time payments are nothing to scoff at – payment history accounts for 35 percent of your credit score.
Lenders want to know if you're responsible with paying your bills on time to determine how much of a risk you are. A stellar record of paying on time is much more favorable (and better for your credit score) than paying late.
Deciding if a reporting service is worth it depends on your credit situation and future plans. If your credit is poor but you'd like to purchase a house in the next few years, it might be worth it.
If you're willing to pay for a rent reporting service, find out which credit bureaus they report to. It would make the most sense (and most bang for your buck) to have the service report to all three bureaus.
For some fees, such as a transaction fee, some services leave it up to your landlord to split the cost with you.
Here's a quick comparison:
Service | Fee | Reports To | Other Fees |
|---|---|---|---|
| Fees paid from landlord or management company | Experian | N/A | |
| $3 per transaction paid for by the landlord, unless they decide you should pay for half of the fee | Equifax, Experian, TransUnion | N/A | |
| $25 flat fee | Equifax, TransUnion | Can add past rental history (up to 24 months) for $5 | |
| $9.95 per month | Equifax, TransUnion | $95 sign-up fee | |
| $9.95 per month | Equifax, Experian, TransUnion | Unless landlord already signed up, you may pay for the processing fee | |
| $8.95 per month | Equifax, TransUnion | $25 one-time sign-up fee |
There's a general credit formula that the bureaus use when calculating your score. These include:
The average credit score is 675 — which is still considered good but not excellent. A 675 may get you approved for credit cards and loans but at potentially higher interest rates, which means you're paying more money.
Generally speaking, an excellent score will put you in the 700 range. Ideally, you should strive for a 750 score or higher so you can get the best interest rates.
Check your credit score before you report your rent so you can track improvements. Sign up for a free credit monitoring service like Credit Karma or Credit Sesame and check your credit score once a month.
Claire Tak is a writer who previously served as head of content and chief editor for FinTech companies in New York and San Francisco. Her work has appeared on FOX Business, Bloomberg and Forbes. She writes regularly about travel, money and being a good human. Traveling and snowboarding are her two favorite things to do.