Does Rent Build Credit? Sometimes, paying your rent on time might help you build credit. All the 3 major credit reporting bureaus will show positive rent-payment history on your credit reports if it has been provided by landlords. Anytime you are planning to rent something, you need to know it will impact your credit. Rental history on credit reports is often used when lenders are determining loan eligibility, and employers can often use credit history prior to hiring new employees. So does paying rent build credit? Here are some things to consider as you are debating your credit rating and renting a property.
Favorable Payment History is Essential
If you want a good credit score, you need to pay your rent on time each month. Several landlords will report your payment history to your creditors. A landlord will need to report payment history for it to appear in the credit reports. It’s not always a standard practice for landlords to send in rental payment history to the credit bureaus, but it does happy more frequently now. We do find that property management companies are keen on reporting this data as it does aid in helping to find the best tenants in the future. Having payment history allows landlords to determine if a person will be a good fit or not.
How Does Paying Your Rent on Time Build Credit?
The addition of favorable rental payment history in credit reports permits you to build or establish credit history via timely lease payments. Credit history is essential in the current market and allows you to get invaluable credit services like credit cards, mortgages and automobile loans. Lenders use credit reports and credit scores to estimate the chance you will repay a loan. If you have poor credit and payment history, you are facing a difficult path of trying to fix the issues while still being able to maintain your home.
Who Will Report Payments to the Credit Bureaus?
In certain states, tenants have a right to withhold payment when the landlord fails to maintain the property as a habitual environment. However, if you plan on not paying your rent, you do run the risk of the landlord submitting the late payment to the credit bureaus. It is best to try and work out an agreement with the landlord prior to withholding payment if you want to avoid having negative information reported to the credit bureaus.
Where Do Rent Payments Fall on My Credit Report?
There are several different credit scores calculated by the data in your credit reports, and many credit card issuers and creditors do not use the scores which think about rent payments. When applying for credit, you do not typically know which score the creditor will pull as it checks your history or that credit bureau’s report they are required to check. Payment history makes up one of the largest chunks of your credit score. A few late payments can spell disaster for your credit rating. So does paying rent build credit? Absolutely! For more information on property management tips, follow our blog, or give Keyrenter a call today!