Timely Rent Payments to Impact Credit Scores
Posted on February 6, 2012
New credit reporting tactics mean that rent payments may now have an impact on your credit score. So if you haven’t been faithful about making timely payments because they’re not reported to the bureaus, it’s time to change that habit.
In June 2010, Experian purchased RentBureau, a rental reporting agency that collected rental payment information. Months later, Experian began reporting timely rent payments on consumers’ reports. Those payments, in turn, were reflected in consumers’ VantageScore based on Experian report data. This year, Experian plans to begin reporting both negative and positive rental history. That means late payments can hurt you the same way that timely payments can help you.
A newer reporting agency, CoreLogic, is working with FICO, provider of the well-known credit score, to create a report and score that includes rental payment history, according to the New York Times. Timely rent payments can make it easier to rebuild a bad credit score, especially if you’re unable to get credit elsewhere.
Some experts are concerned that reporting of rent payments could infringe on a consumers’ right to withhold rent payment in certain circumstances. For example, certain states allow tenants to withhold their rent if the rental property needs major repairs or has code violations. Landlords may inaccurately report these payments as late, which would result in damage to the tenant’s credit report. Unfortunately, if the tenant pays this rent to protect their credit rating, damages may go unrepaired since collecting rent is often an incentive for landlords to make repairs.
Only a fraction of landlords will be reporting rental history, so only a percentage of renters will see this information on their credit reports. You’re more likely to see your rent history on your report if a large property management company owns your apartment. If you have a co-signer on your lease, your rental payments will also be listed on that person’s credit report. Negative – and positive – payments will affect the co-signer or co-lessee just as it does the tenant.
Not only must you be sure to pay on time, you also have to make sure there’s enough money in your checking account to cover your monthly rent payments. A bounced check is typically considered a late payment and that will go on your credit report if it’s not corrected in less than 30 days.
Prematurely terminating your lease early can also be reported, though many landlords have been reporting this type of information to the major credit bureaus for years.
As with other credit report information, you have the right to dispute inaccurate information with the credit bureau. The bureau will do an investigation and correct your report if the investigation shows there was indeed an error. However, if the credit bureau’s investigation doesn’t turn out in your favor, you can dispute with your landlord. The landlord is also required to investigate and update the bureau if there was really an error. This is an important step because computers may show there are errors even when you have documents that prove otherwise. If you haven’t been before, it’s time to be diligent about keeping record of your timely rent payments.
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