Reporting your rent payments to the credit bureaus helps you build your credit score by factoring in a history of positive payments that otherwise wouldn't be part of your credit reports.
Paying your rent on time and in full demonstrates your creditworthiness, especially if you're newer to using credit.
Rent payments are not automatically included in your credit reports, unlike credit card or auto loan payments. You can use a rent reporting service like Boom, which adds your positive rent payment history from the past two years, as well as current payments, to your credit reports.
What is rent reporting?
Rent reporting means using a third-party service to get your rent payments reported to the credit bureaus, Equifax, Experian, and TransUnion, which create your credit reports. The information in your credit reports is used to calculate your credit scores.
Payment history – your record of making on-time payments on your financial obligations – is the most important factor that affects your credit score. Payment history accounts for 35% of your FICO credit score and 40% of your VantageScore. A history of positive rent payments on your reports can help your score.
Benefits of rent reporting
Rent reporting has many benefits, especially if you are new to the world of credit or you're rebuilding credit.
- Building credit history
Rent payments are typically the most significant recurring expense for many. Renters made up 33% of all households in the country in 2021, more than at any point in the past 50 years, according to a report by the Pew Research Center.
Payment history, or credit history, is a section of your credit report that lists your record of borrowing and paying back money. If you don't have credit cards or other types of loans, reporting your rent payments is a great way to establish your credit history or beef up your existing credit history without having to borrow money.
- Improving credit scores
Credit scores are used by lenders, potential landlords, and in some cases, employers, to gauge your financial stability and track record as a borrower. Your credit score is a number between 300 and 850. The higher, the better.
Only items that are part of your credit reports can influence your score. Since rent payments were not traditionally included, they did not help your score even if you were diligent about paying your rent. Even now, past versions of FICO still in use by lenders do not consider rental information.
Reporting your rent is an easy and powerful way to improve your score. On average, Boom users see a credit score increase of over 28 points in two weeks, up to a maximum of 105 points.
On the other hand, not paying rent on time always carries the risk of negative consequences. If you are late on your rent by 30 days or more, your landlord can report the late payment to the credit bureaus, damaging your score, or send the debt to collections. You may also have to pay a late fee to your landlord.
- Potentially lower interest rates for loans
A high score and solid credit history improve your chances of qualifying for the financial products you want, like rewards credit cards and loans. The lowest rates usually go to those with strong credit profiles, which can save you money on interest.
Good credit can also help you save money on security deposits for your next apartment or utility accounts.
How does rent reporting work?
Now that you understand the power of rent reporting, let's take a look at how to set it up. Rent reporting companies usually charge either the renter or the landlord a monthly fee for ongoing rent reporting services, as well as a one-time enrollment fee.
Signing up with rent-reporting companies
We may be biased, but we think signing up with Boom is simple. In just a few minutes, you can:
- Download the Boom app
- Verify your identity
- Add your rent details
- Connect the bank account from which you pay rent
Boom charges a one-time enrollment fee of $10 and costs $2 per month (paid annually) going forward. Boom syncs to your bank transactions and starts reporting only your positive rent payments to all three credit bureaus. You can also choose to sign up for Boom's past reporting service ($25 one-time charge) which adds up to 24 months of past rental payment information to your credit reports.
Submitting rental payment information
You don't have to submit any information about your rent after Boom is set up. Boom automatically scans your bank transactions to identify rent payments and reports them to the credit bureaus.
Rent reporting services, including Boom, either work directly with renters or integrate with landlords and property management companies to gather rental payment information.
Updates on credit reports and scoring
Credit reports generally update every 30 days, as lenders report information on your payment behavior over the past month.
With Boom, your credit report will be updated in as few as 10 days from the time of checkout. It can take up to 30 days from verifying your data to seeing Boom show up as a tradeline in your credit report. Once it's on your credit reports, you will start to see your score change.
As a consumer, you can check your credit reports for free from each credit bureau weekly until December 2023. You can view your credit score for free using Boom, your bank, or many financial apps.
Is rent reporting right for you?
Depending on where you live, some landlords may be required by law to offer rent reporting services. If you're thinking about signing up as a renter, here are a few things you should consider first:
Assess your financial situation
The main question to ask yourself is whether you're able to afford your rent and can pay it on time, every time. Although Boom and other rent reporting services do not report negative payments, your landlord may still choose to.
Weigh the pros and cons
The credit-building benefits of rent reporting are powerful when you are new to credit or rebuilding it after missteps. Rent reporting services like Boom that report your payments to all three bureaus have the maximum credit impact.
If you have an established credit history and a decent score, adding rent payments may not make a big impact. Or you may not feel the need to pay for a rent reporting service. Weigh the pros and cons before you sign up.
Tips for successful rent reporting
Making rent payments consistently
On-time payments are the best way to show your creditworthiness as a borrower. After you sign up for a rent reporting service, make sure you consistently pay your rent on time to help your credit.
Setting up autopay
Setting up automatic rent payments guarantees that you will never be late, giving you peace of mind about rent payments being reflected on your credit reports.
Monitoring credit reports
Always monitor your credit reports, regardless of whether you use a rent reporting service. Mistakes on credit reports are relatively common and sometimes they may also be a sign of identity theft. Check your credit reports regularly to make sure they're reflecting your payment behavior accurately. If you find errors, you can dispute them with the credit bureaus.
The bottom line
Rent reporting services beef up your credit history by adding positive rent payments to your credit reports. Rent reporting can be a powerful way to build your credit score.
FAQs
Does rent hurt your credit score?
Rent payments can have a positive impact on your credit score if you report your rent payments to the credit bureaus. Rent payments aren't included automatically on your reports. But if you're 30 days late or miss a payment, your landlord can report it, which will hurt your score.
What bills help build credit?
The bills that automatically count toward your credit are credit cards, auto loans, student loans, mortgages, and medical bills. If you use a rent reporting service or utility reporting service, you can also add rent and utility payments to your credit reports, which helps build credit.
