At the end of 2021, the median rent in the United States was $1,309 per month or $15,708 per year. Which is just crazy to think about, especially considering how many people didn’t have jobs. Even the cheapest cities to rent in cost more than $600 per unit on average for a studio apartment.
For many people, housing represents the most significant expense each month. One would think, then, that rent payments would automatically be reported to credit bureaus. However, despite this substantial financial burden, most landlords don’t regularly report on-time (or late) rental payments to credit bureaus.
Late Rent Payment Reporting
Currently, it’s common to report only significantly late payments – those that are more than 60 days past due. Because of this, renting does nothing for an individual’s credit report until they come upon hard times and pay late. It doesn’t matter if someone rented for an entire decade before paying late once; as it stands, it’s not surprising to find that such a scenario results in a dinged credit report with no positive reports at all.
Renters and their credit reports would be positively impacted if their landlords sent monthly updates to TransUnion, Experian, or Equifax. Furthermore, the Senior Vice President of TransUnion, Ken Chaplin, says that even landlords would benefit from reporting on-time payments because they’d attract more people who plan to improve their credit score.
Benefits of Positive Credit Reporting
According to Experian, positive reports from any creditor help to improve a credit score. Every time you pay your credit card, student loan, or auto loan by the monthly due date, these creditors send an update to the credit bureaus. These updates let the bureaus know that you’re reliable and financially stable, and these factors are included in your credit score calculation.
Some companies, like PayPal Credit, are notorious for not reporting to credit bureaus until something’s gone horribly wrong, and you’re late on payments by three to four months. Landlords are a bit like PayPal Credit; they don’t act until you’ve messed up, ignoring the months upon months customers paid on time. However, there are methods to get your rent payment reported to the credit agencies.
Changing the Status Quo
No matter the country, not all landlords are known for being understanding and amenable to renters’ problems or suggestions. However, if you’re on good terms with your landlord, consider bringing up the topic or reporting rent payments. Point out that it’s a major incentive for financially responsible people to rent from them. Tell them having positive reports on your record is important to you.
If you’re not friendly with your landlord, which is likely the case when renting from a large rental property company, at least broach the topic so they’ll know that it’s something residents are interested in.
Before signing a new rental agreement, make sure the landlord reports to the Big Three on a regular basis. You have the most freedom to request regular reporting when you’re not yet locked into a 12-month contract. If possible, don’t just take the landlord’s word for it that they’ll report to TransUnion, Experian, and Equifax; get it in writing.
Fortunately, there are other steps you can take to get your rent payment reported to the credit bureaus. We’ve put together a comprehensive list of services that take the work out of rent reporting, for both renter and their landlords.
Other Factors that Affect Your Credit Score
Young adults are often told that paying all of their bills on time is incredibly important. Of course, it’s important to live within your means, but the truth is that property managers, utility companies, cell phone providers, and even some credit card companies don’t bother reporting the occasional late payment, let alone any on-time payments.
The Payments that Most Affect Your Credit Score
As a general rule, paying bills on time is a good habit to build. But if you ever have to pick and choose, focus on paying credit cards, car loans, and mortgages first. If you ever run into an issue with potentially missing a payment, be proactive in contacting creditors to let them know. Being ahead of the game can make a tremendous difference in keeping your credit healthy for the long term.
