Rent payments now are being added to credit reports, benefiting timely paying tenants when they go to buy a home
By Marilyn Kennedy Melia
A record 43 million households rent, rather than own. Many of them aren’t getting the credit they deserve, but some businesses are aiming to change that.
Reports on whether renters make timely payments to their landlord typically aren’t sent to credit bureaus, but mortgage payment histories are captured. This puts renters who aspire to get a mortgage to buy a home, or even just acquire a credit card, at a disadvantage, since the approval and cost of credit is influenced by a consumer’s history of bill paying.
In fact, the FICO credit score, widely used by mortgage lenders, began incorporating rental data in its newest version, FICO Score 9, when it released in the fall of 2014. Many mortgage lenders, however, still be use older versions, which do not collect rental data.
“FICO strongly supports the incorporation of rental information into the credit file, but the simple fact is that rental data is rare in the credit file today,” says Christina Goethe, a FICO spokeswoman.
“Right now, it is typically medium- to large-size property management firms that are reporting,” observes Ben Hyatt, of RentTrack, a service that enables rent reporting.
Yet a number of large rental firms still don’t report, and independent landlords are difficult to reach, say experts.
Still, landlords and renters make timely payments both benefit from reporting. “Currently we pay extra with our credit companies to search landlord/tenant records for rent judgments because it is the only way we can find out about delinquent rent payments,” notes Cindy Clare, president of Kettler Management, an apartment management firm.
At least three firms — RentTrack, ClearNow and PayYourRent — operate websites enabling tenants to make electronic rent payments, with reporting to some or all of the credit bureaus, notes Emily Christiansen of Experian RentBureau. Tenants can ask their landlords to accept payments through these services to build their payment history.
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