Does Rent Affect Your Credit Score?

How rent affects your credit score

Much like making payments to credit cards, mortgages, auto loans and personal loans, paying your rent on time can positively affect your credit score, and making late payments or missing them entirely can negatively affect it. However, your rent payments will only have an impact on your credit if your landlord reports them to credit bureaus, and only about 40% do.

Either your landlord or you, as the renter, can decide whether the credit bureaus even know about your rent payments. Property managers can opt into rent reporting through a third-party company, and renters can also self-report rent payments and utility payments through third-party rent reporting services.

Payment history accounts for up to 35% of your credit score. On-time payments can boost your credit score by 20 to 60 points in certain models from credit reporting agencies, like FICO 9 and VantageScore 3.0 and 4.0. Late payments or missed payments can drop your score by 60 to 100 points and can negatively affect your credit report for up to seven years.

Note that not all credit scoring models include rent payments, even if you or your landlord reports them. If you’re applying for a mortgage or auto loan, for example, your lender may still use FICO 8, an older credit model that doesn’t include rent payments. Some lenders may use outdated scores, so check with yours before applying for the best chance at approval.

Here’s a quick look at how rent payments can affect different credit scoring models.

How to report rent payments to credit bureaus

Whether you’re a landlord or renter, you can report rent payments to all three credit bureaus using a service directly from the bureaus or by using a third-party service. Bilt Rewards is a service available from Equifax, and Experian Boost is available through Experian, but there are many paid services from third parties you can use to report to all three bureaus at once.

Set-up fees for these services range from $0 to $100, and monthly fees typically range from $0 up to $10. However, these can be worthwhile, as they can positively affect your credit score. The table below provides a quick breakdown of some of the popular services and how they compare.

Note that some of these products require that your landlord use a rent payment processing software, so you should check to see if yours uses a specific payment platform that has a rent reporting service add-on.

If you’re choosing a standalone reporting service without a payment platform, choose one that reports to all three bureaus for convenience. For the fastest bump to your credit score, choose a service that offers back reporting, as this can raise your score significantly within a few weeks rather than waiting for new payment history to accrue.

You should always verify if your landlord plans on reporting to credit bureaus before signing a lease. According to TransUnion, only around 40% of landlords report rent. Adoption of rent reporting has been slow because of confusion around how challenging and time-consuming it is, but it can be beneficial to both landlords and renters.

Even if your landlord doesn’t plan on reporting, you may want to consider self-reporting to get credit for on-time payments if you’re sure you can make them. If your landlord isn’t willing to participate, some services allow true self-reporting, but you may need to submit monthly documentation to verify payments.

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Pros and cons of rent reporting for your credit score

If your landlord chooses to report your rental payments to the credit bureaus, you can’t opt out of it. If they don’t use a rent reporting service, though, you can choose to opt into rent reporting to help fix your credit, or you can opt out. There are a few pros and cons to rent reporting for your credit score that you should consider before deciding.

Pros of reporting rent

In some cases, reporting rent payments to the credit bureaus can have a major positive impact on your credit score, sometimes raising scores by up to 60 points.

• Back reporting for a fast increase: Many rent reporting services offer back reporting for up to 24 months, so you can build immediate payment history. This is especially helpful for those who are unscorable due to insufficient credit history.
• Credit for on-time payments: You get credit for making what is likely one of your largest monthly payments on time each month.
• Higher loan approval rate and better terms: A higher credit score will usually lead to an improved likelihood of securing financing and may lead to better terms, like a lower interest rate.

Cons of reporting rent

Of course, there are some potential downsides to consider, too, which you should think about carefully if you’re making the decision to self-report.

• Missed or late payments can be detrimental: Just like with other items on your credit report, missed or late payments can bring your score down and can appear on your credit report for up to seven years.
• Could increase your debt-to-income (DTI) ratio: Your DTI ratio is a measurement that lenders use to determine your ability to repay a new loan. If you have credit card debt, student loans and personal loans you’re repaying, adding rent could push your DTI too high to secure financing.
• Can come with fees: Some credit reporting services, like Experian Boost, are free, but they only report to a single credit bureau, which means less of an impact on your overall credit. Other options may come with upfront, monthly or annual fees.