Rent Now Included in Experian® Credit Reports
Posted on March 22nd, 2011
Good credit is a result of borrowing money and responsibly paying it back over time. One problem for new borrowers, college students, recent graduates and others with limited history is the difficulty in establishing credit when lenders frown upon people without any credit history – a vicious cycle of rejections. If you’ve never been approved for a credit card, mortgage or personal loan, a co-signer would be required for almost any type of request. But now, Experian® includes rental unit data into their company’s traditional consumer credit reports. They are the first and only major credit reporting agency to include residential rental payment stats in credit reports.
Benefit to Consumers
Thanks to the credit reporting agency Experian®, if you rent your home, your residential rental payments will now be recorded on your credit report. Pay on time and this positive activity will show up on your Experian credit report and boost your credit score. For a renter who hopes to one day own their own home, this is great news. This offers them an option besides credit cards to begin build a credit history. Simply by renting and having your landlord report it, you are building your credit. And while it may be to their benefit to open a credit card account, they won’t be forced to as long as your rent is being reported.
Benefit to Landlords
Tenant payments are voluntary; landlords are not required to report to the agency. But over time it will be to their advantage as they will be able to access a potential tenant’s report to determine if they handle their finances responsibly. Experian RentBureau® collects property rental information nationwide every 24 hours and provides property management companies and resident screeners a more accurate and complete picture of residents, leading to improved leasing decisions. TransUnion also has a subsidiary that provides rental payment information to landlords to help them screen tenants but does not include the data in their credit reports.
There has been some criticism of the new data collection as an invasion of privacy. There is also concern for the additional restrictions that may be applied when responsible consumers are denied financial resources based on another set of criteria.
But only time will tell how much impact it has on the scoring algorithm and consumers’ ability to build up their credit history. If the results are positive, we can expect TransUnion and Equifax to begin doing the same and include rent in their reports.
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Tags: Credit, Credit Reports
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