Last Updated on March 10, 2022 by Luke Feldbrugge
Rent reporting is a big deal if you plan to purchase a home in the future. If it seems like the scales are tipped against you in terms of buying a new home, the scales may have just moved a bit in your favor. Major credit agencies have begun to accept rent payment as part of their credit calculations, giving renters who want to become first time home buyers the leverage they deserve but didn’t always get. Here we take a look at rent reporting, ways to do it, and why it’s important for renter’s credit and future purchasing power.
U.S. Rent Reporting by the Numbers
- 44 million renter households in America – Currently, less than 10 percent report their rent payments to the credit bureaus
- 45 million U.S. consumers are “credit invisible,” meaning they are denied credit because they don’t use or can’t access credit
- With the inclusion of rent payment in the credit file, 9 percent of consumers went from “unscorable” to “scorable” with an average credit score of 631
- 60 percent of renters may see their credit scores increase as early as the first month of rent payment reporting
3 Main Ways to Report Rent Payments
Rent Reporting is Done by Landlord or Property Management
Your landlord or property management company may already be reporting your rent payments to an organization that passes that information on to credit agencies. For example, your landlord may use rental payment services that collect your rent electronically and automatically send that information to agencies that will factor it into your credit score (e.g. Experian RentBureau). The plus for landlords is that when they report to credit bureaus, on-time rent payments go up. It’s both a benefit and an incentive.
Do it Yourself – Free Rent Reporting Services
- eRentPayment: Free for renters, but landlords are charged $3 per transaction or $10 for up to five transactions per month. It reports to Equifax and Experian credit bureaus.
- PayYourRent: Free rent reporting service for renters that reports rent payments to all three bureaus. This service is typically set up by landlords.
- Piñata: Free rent reporting app but it is only available in the App Store for iPhone. It reports to at least one major credit bureau, no matter your landlord. If your landlord signs up for a specific partnership with Piñata, your rent payments can be reported to all three bureaus.
Do it Yourself – Rent Reporting Services that Charge a Fee
- MoCaFi: Gives you the first report free if you use a debit card or it’s app. After that, it’s $3 per month, and the information goes to Equifax and Transunion.
- LevelCredit: Charges a $6.95 monthly fee to have your rent and utility payments reported to Equifax and TransUnion. If you want them to look at your previous 24 months of payments, it’s a one-time charge of $49.95.
- CreditMyRent: Has a monthly fee of $14.95 with no setup fee. You will pay more if you want past rent reported. It talks to TransUnion and Equifax.
- PaymentReport: Reports your rental history to Equifax and Transunion for two years for a $49 enrollment fee. Ongoing reporting is free, and you can add an additional roommate or spouse at no cost.
- Rent Reporters: Charges a one-time enrollment fee of $94.95, which includes up to two years of reported rental payments. From there, you can enroll in a monthly plan or the annual plan, and this service reports to TransUnion and Equifax.
- Rock the Score: Has an enrollment fee of $48, with the ongoing subscription costing $6.95 per month. For two years of previous payments, you will pay $65. This service reports to TransUnion and, if the landlord is a property manager, Equifax.
- Rental Kharma: Has an initial setup fee of $50, and that includes six months of past history. Ongoing charges are $8.95 per month, and it reports to TransUnion.
- Esusu Rent: Will report your rental payments to the Big Three for a $50 annual fee if you use the Esusu Rent mobile app. (It also has a version offered through landlords.)
How Much Could Reporting Rent Payments Affect Your Credit Score?
TransUnion did a study back in 2017 that showed that the average increase in credit score was 16 points. That’s the average, but the increase was a lot more for people with credit scores below 620.
Freddie Mac and Fannie Mae are also involved in this move to give credit where credit is due. Freddie has had this program in place since August 2021, and only positive rental histories are reported. Missed payments won’t count against you but it could cause you to be unenrolled in the program. One drawback with Fannie Mae is that you need to have at least a 620 credit score to be enrolled in its program.
IMPORTANT: Credit History Helps to Qualify for a Home Mortgage
If you plan to own a house, rent reporting is an important to-do for you to manage while renting. Get ahead of the others who are not taking the initiative. We’ve shown you the numbers. In today’s market, it is challenging for first time home buyers to find a home due to the competitive nature of the market. Homes are getting snatched up quickly and typically for more than the asking price. So if you’re renting now, make sure your rent payments are getting reported to the credit bureaus, and give yourself the best chance to compete with other home buyers when it’s your turn to make an offer on a house.
Homes for Heroes Can Save You Money on a House
When the time comes to start shopping for that house you want, sign up to speak to our local real estate and mortgage specialists and they will explain all we do for our heroes to get you a home, and save you an average of $2,400 when you close on that house. We would be honored to assist you when the day comes.