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Rent Payments to Help Raise Your Credit Score

[Sunday, July 7th, 2019]

Did you know that rental payments can boost your credit score? In case you make them on time, they really can. Many latest studies prove this statement and show that sometimes it is possible to earn up to 40 points or even more.

What Rental Payment Studies Show

A TransUnion study conducted in 2014 showed that the inclusion of information on rental payments in credit reports of consumers with bad credit earned them extra 10 or more points in 41% of cases.

Another research performed by RentTrack in 2015 found that people having poor credit score could raise their VantageScore by almost 30% on average only in 2 months after the start of their rental payments reporting to the credit bureaus.

In 2017 Experian and the City of New York also conducted a study on the subject of rent payments’ influence on credit scores. It found that more than 75% of leaseholders with rent payments added to their credit reports noticed considerable improvements in their score. One more important discovery of this study is that even people who are absolutely new to credit can leave the status of «no credit» behind and get their first points.

All these researches are supported by the latest one by Goldman Sachs, Giv Development, and Credit Builders Alliance. This study concludes that bad credit consumers can get more than 40 additional points to their VantageScore if including rental payments. The amount is quite significant and, according to the study, can be achieved just as soon as in 4 months.

How to Make the Most of Rental Payments

There is no doubt that the method is working. Good rental payment history can positively impact credit scores and lead to good credit history. However, still most landlords do not report rent payments to the credit bureaus. In this case, you can apply to a third party to further this process.

But even if your landlord is an exception and does report your payments, it may still have no proper effect on your credit. The main snag is that this will do only if the issuer or the lender you want to get a credit card or a personal loan from should also use credit scoring models that allow to include rental payments and consider them in calculations. A good example is VantageScore that has been incorporating rent payments into consumers’ credit scores since 2006. In addition to VantageScore, such models as FICO Score 9 (FICO’s latest credit score version) and FICO XD (FICO’s alternative credit score) incorporate rent payments as well.

Bottom Line

If you catch every opportunity to improve your credit, do not miss this one. See your score increasing while you simply pay for your accommodation. Just don’t forget to make sure your lessor reports to the credit bureaus and your issuer uses the necessary scoring model.

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