How Your Rental History Can Boost Your Credit Score
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What Gets Reported. And What Doesn’t.
A concern that has plagued credit conscious consumers for some time has been about their rental history. Does it report to your credit report or not? If not, why doesn’t it report or how can it get reported that payments are being made on time? For many consumers who stay away from credit cards and loans to avoid getting into debt, their rent payments and utility bills are for the most part all they have to show how well they pay their bills on time. If you’re a just graduating college and entering the workforce, you may not have much of a credit history which can make it difficult to get a loan someday to buy a house or a car. This article with explain how your rental history can boost your credit score.
Unfortunately, for many consumers, monthly rental payments, monthly electricity bills, or phone bills have not reported to the major credit reporting bureaus; Experian, Equifax, or TransUnion to accurate reflect a consumer’s credit worthiness. In fact, it’s just the opposite. If you your rent, electric, gas, water, cell phone, and internet bill on time each month – there is no change to your credit report or score. However, if you stop paying any of those accounts, you run the risk of the account being turned over to a collection agency and the collection company can report derogatory information about you to the credit bureaus which will hurt your credit score.
There is a little light here. As far as your rent is concerned, there are some ways to get your rent payments reported to your credit report. If your landlord or property manager agrees to provide a little information about your payments, then there are companies who will get your rental payment history added to your credit report.
Get Your Rental History To Help You
Rental Kharma allows you to add up to two years of your past rental payments to your credit report. You will fill out a simple online application, provide your landlord or property management details, and then Rental Kharma will verify that information and take care of the rest. Also, after your rental history gets reported, Rental Kharma can continue to report your rental payments on a monthly basis. This will continue to build your credit history as you are renting. Rent data gets submitted to the bureau twice a week and can your rental payments reported within 30 days. Rental Kharma was founded by individuals who believe that everyone should be able to build their credit score without having to go into debt. They are located in Denver, CO and have a very good track record.
Experian also incorporates on-time rental payment data reported to their Experian RentBureau. The process is very similar. Experian RentBureau receives updated rental payment data from property managers and continuous monthly payments may be included with Experian credit reports.
The amount of points your score will improve is still going to be based on all of the data that is on your credit report today. Your payment history makes up thirty-five percent of your credit score, your balances make up thirty percent, your length of history make up fifteen, and new credit and types of credit you have make up ten percent each. If you have a short credit length or no credit length at all because you never establish credit, then the rent payments will help that component of your credit score because you’ll be adding six, twelve, or even twenty-four months of credit history to your credit report. If you’ve always paid on time, that is going to help your payment history. Also, if you have a credit card or two in your name, adding your rental history could help your types of credit component because you are diversifying your credit portfolio.
The Smaller Credit Bureaus
Although your monthly electricity and cell phone bill don’t get reported to the major credit bureaus that you are paying on time, your payments do get reported to a few smaller, bureaus that collect your utility bill history and cell phone payment history. While these smaller bureaus don’t show up on your credit score because your scores are derived from the three major credit bureaus; Experian, Equifax, and TransUnion, the good news is you are still getting some kind of “credit”. In fact, when you plan to switch energy providers or cell phone providers, these companies could be checking your main credit scores as well as your standings with a small credit bureau that stores your payment history data.
If you ever find yourself having trouble with getting approved for an apartment or a rent house and you don’t see anything negative on your credit report, there is “hidden” credit bureau called LexisNexis that collects your public record data. Public records are accounts that were sent to a court house like a tax lien, judgment, or bankruptcy. If you ever broke an apartment lease, there is a high probability that it got reported to Lexis Nexis. Landlords and property management companies often use Lexis Nexis when screening tenants to ensure that the tenant never got reported to Lexis Nexis for an unpaid lease or a broken lease. If you ever find yourself having problems with renting a house or an apartment and nothing is showing up on your credit report, you will want to request a copy of your Lexis Nexis Accurint Comprehensive report.
Upon receiving your Lexis Nexis report, if you see some discrepancies that need to be challenged, you will want to begin contacting them in writing explaining your side of the story and attaching any proof you have to support your claim. They are bound by the same guidelines that the main three credit bureaus are that they have thirty days to respond to your dispute in writing. If your side is accurately presented and there was an error found, it should be removed off your Lexis Nexis report right away. If there aren’t any errors or issues and it is a debt you legitimately owe, you will contact to begin making contact with the company directly that has filed the claim against you.