More renters can now add rent payments to their credit score
Reporting negative information could impact tenants who might want to withhold rent as a way to force landlords to maintain or repair buildings, Ms. Nelson said. If landlords report the withheld payments, tenants may feel pressured to pay to avoid damaging their credit. a recent news item suggested this happened in New York City.
Zillow's service considers payments on time if they are received within 30 days of the due date, said Amy Wipfler, senior product manager for social impact at the company. Payments made afterward will not be reported. The new service is available to “tens of thousands” of tenants, she said.
Currently, Zillow's service reports only to Experian. If a participant applies for a loan from a lender that uses one of the other credit bureaus, the positive rental payments will have no impact. Zillow wants to add the other credit bureaus, Ms. Wipfler said. (Other services, such as Esusu and Self Financial, report to all three.)
Here are some questions and answers about using rental payments to improve credit scores:
Can all credit scoring systems take rental payments into account?
No. Only the latest, but not yet widespread, versions of credit scoring systems from FICO, the data analytics company, can include rental data, said Ethan Dornhelm, the company's vice president of scoring and predictive analytics. The FICO 8 version, an older but widely used model, cannot account for rental prices, he said. All versions of VantageScore, a scoring model owned by the major credit bureaus, can take rental payments into account, spokeswoman Sarah Cain said in an email.
Are there fees associated with rent reporting services?
That varies. Some services are free for both landlords and tenants, while others charge one-time or monthly fees. (Some are free for new rent payments, but charge a fee for reporting previous rental history.) For consumers who already have a high credit score, it may not be worth it to have their rent reported, as they would likely receive additional benefits seeing an even higher score. , said Ms. Johnson at TransUnion.
What are other ways to build credit?
Options for building credit if you have a limited credit file or damaged credit include opening a “secured” credit card. Typically, you make a deposit and get a credit limit up to that amount, and your payment history is reported to the credit bureaus. Some community banks and credit unions offer “credit builder” loans. The money you borrow is held in a bank account while you make payments, which are reported to credit bureaus. Once you pay the loan amount, you will get access to the money.