Rent payment is usually a top priority in the minds of the majority of tenants. If you live in a rental property, the first thing you would do each time you get your paycheck is probably set aside a portion of your earnings for your monthly rent.
Besides, some people may not have started to build a credit history but have been paying rent on time for long. Some even don’t mind taking emergency loans for rent payment like the first home buyers with a very tight budget.
When your credit scoring system doesn’t take rent information into account, why do you put yourself through the stress of paying rent on time? Of course, it’s the importance of having a roof over your head, but wouldn’t you want to be rewarded for being punctual in paying your rent?
There’s one way by which you can get your rent payments information on your credit reports, and that’s through Rent Reporting. Now the big question is: what will be the effect of reporting rent payments on your credit scores?
Let’s find out whether or not you should report rent payments to a credit bureau.
What Happens Before Reporting your Rent Payments
Usually, banks and other lenders perform credit checks to know if you will be able to repay the borrowed money. Just like them, most landlords tend to skim through your credit report before approving your rent application or signing a rent agreement. Landlords aim to know how likely you’re to pay your rent on time. But in the process of checking your payment history, if any landlord raises a hard inquiry on your credit report, your credit score can reduce by five and ten points. Although not all landlords run a check on your credit history, you should always try to keep your credit score in good shape.
If you don’t report your rent payments, can your credit score really indicate whether you were, are, and will pay your rent on time? There could be individuals who have been paying rent on time for years but have a low credit score, and those having good to excellent credit might be skipping their rentals.
That being said, you can only measure the effects of paying your rent on time on your credit score when you actually get the information on your report.
How to Report Rent Payments to a Credit Bureau?
If you are ready to get the reporting process started, you need to talk to your landlord first. You may not be able to report your rent payments without the help of your landlord or property management company. Either of them have to enroll in one of the rent reporting schemes only then you can get the rent paid information reflected on your credit report.
There are various rent reporting services that can ease your process by doing all the groundwork on your behalf. Most of these services do charge marginal fees for this. But the fees may seem totally worth after looking at the effects of your timely rent payments on your credit score.
What Happens After Reporting your Rent Payments
You can now get the advantage of paying for your rented house!
As soon as you’re enrolled with a rent reporting service, check whether you will still have to pay your rent to your landlord or to the service provider. It is better to check how different rent reporting services work before picking the most suitable one for you and your landlord. After all, the service providers act as a mediator between the tenant and the landlord.
Remember once your rental payments are on your report, you will have to ensure that you always pay the rent on time. Any delay will be automatically reported to the credit reporting agencies.
All in all, rent reporting is a boon for those tenants who pay rent on time and bane for those who don’t.