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- Without intervention, rent payments don't show up on your credit report, so they don't affect your credit score.
- You can use a rent reporting service to report your rent payments and other bills to the credit bureaus.
- Rent reporting has a greater impact on your credit score if you're new to building credit.
Building credit, especially rebuilding credit after damaging it, can be a slow and arduous task. This is largely because the information that raises your credit score is traditionally limited to borrowed money.
This leaves most of your monthly expenses out of your credit reports, such as your rental payments, which comprise 32% of the average American's income. Yet, rent reporting services allow you to count these payments toward your credit, making borrowing more accessible. Even the best rent reporting services don't come free, but the boost to your credit score can be worth it.
Does rent payment affect your credit score?
Without any intervention from you or your landlord, rent payments typically have no impact on your credit score.
To understand why paying your rent doesn't affect your credit score, we can look at how your credit score is calculated by the credit scoring models FICO and VantageScore. These scoring algorithms calculate your credit score from information on your credit report provided by your creditors.
While your credit card companies or auto lenders often report your payments to the credit bureaus, your landlords don't automatically report your rent. That is because reporting any information to the credit bureaus, also known as data furnishing, is voluntary, and the data furnishers are regulated by the Fair Credit Reporting Act. Thus, it's often not worth a landlord's time and effort to report rent payments to the credit bureaus.
That said, you can take steps to get your rent payments reported to the credit bureaus.
How to build credit with rent payments
To boost your credit score with your rent, you'll need to look into rent reporting services. These third-party companies will report your rent payments to the credit bureaus on behalf of you and your landlord for a monthly fee. The added information will build out the payment history on your credit reports, which makes up 35% of your FICO credit score and 40% of your VantageScore credit score.
When choosing a rent reporting service, take note of the features that the service offers. Your rent reporting service should include retroactive rent reporting (reporting payments made before signing up for rent reporting), a refund policy, and three-bureau reporting. "If they only report to one of the bureaus, then they're only partially solving the problem," says Freddie Huynh, vice president of data optimization at Freedom Debt Relief and former FICO employee.
While these services sound great, Huynh says that "the reality is that there's a lot of devil in the details." For one, some services require your landlord's cooperation which can be a nonstarter for some renters. Some of these services will even charge your landlord.
Additionally, even if your rent appears on your credit report, it may not be factored into your credit score, depending on which credit score you're looking at. For general lending purposes, most creditors look at FICO 8, FICO 9, and VantageScore 3.0. While VantageScore 3.0 and FICO 9 use reported rent in their calculations, FICO 8 does not, even if those payments appear on your report.
Are rent reporting services worth it?
Rent reporting services can be costly, with a hefty signup fee and monthly subscription fees. However, the boost to your credit score may be worth the money, especially if you can secure a lower interest rate with your resulting credit score. Our pick for the rent reporting service with the best overall value, LevelCredit, claims that its average customer sees a 20-point increase within two months and a 50-point increase within two years. This could mean the difference between a subprime and prime credit score.
That said, any credit-builder product, even the best credit-builder loans or best secured credit cards, has limited utility once you build out your credit to a certain point. Similarly, adding rent to your credit report won't raise your credit score if you have an extensive credit history and can already qualify for low interest rates.
Rent reporting frequently asked questions (FAQ)
Can you pay rent using a credit card?
Yes, you can pay rent using a credit card. That said, this comes with several downsides, including interest accumulating on your debt and potential processing fees landlords tacked onto your rent payments via credit card. On the other hand, paying your rent with a credit card can help you earn rewards. For example, the
Should I pay for rent reporting?
While rent reporting can be worth the money, you may not necessarily have to pay for it yourself. Experian Boost recently added rent to the growing list of payments it will add to your credit report, including utility bills and streaming service subscription fees. Additionally, you can ask your landlord if they'll consider signing up for rent reporting for their tenants or if they're already enrolled.
Does rent reporting require landlord approval?
You don't necessarily need your landlord's approval to use a rent reporting company, though their cooperation may be necessary depending on the service you choose. When you select a company to use, make sure you understand the terms of service.