The so-called “American Dream” of owning a home is changing. For many people, renting suits their need for flexibility, and can be an economic necessity with rising home prices and soaring student loan debt.
According to the Pew Research Center, the total number of households headed by renters grew significantly from 2006 to 2016, jumping from 34.6 million to 43.3 million households. People younger than 35 make up about 65% of the 43.3 million renting households.
Head-of-household renters, especially young people, have been in a credit Catch-22: Almost all have been paying their rent responsibly and on time, but that track record of on-time payments has not been reflected in their credit history. Fortunately, that situation is changing for the better.
Rental payments can now be reported to the three credit reporting agencies, Experian, Equifax and TransUnion, and the newest credit scoring models use rental-payment data when calculating your credit score.
If you are a renter, this means that you can build—or start—your credit history without taking on additional debt, and potentially improve your credit score with your on-time rental payments. Get your rental account reported and it will show on your credit report, then every month when you pay your rent, your positive account history will continue to grow.
Credit grantors, such as banks, credit card companies, auto finance companies, and telecommunications companies will be able to see that positive payment history, which is a good signal that you have the ability to pay bills on time and manage your money.
Another way you can get credit for your positive payment history is by taking advantage of tools like Experian Boost™† , a new product that allows you to instantly increase your FICO® Score* by adding utility and phone bill payments to your credit file. Visit experian.com/boost now to register.
Depending on if you are renting from a large apartment complex or a private party, it may take a little initial legwork to get the reporting process started. But after that, your rental payments can be reported to the credit reporting agencies every month.
The first step in getting your rental account reported to the credit-reporting agencies is to contact Can Rent Build Credit by clicking HERE.