The Growing Impact of Rent Reporting on fighting 'Credit invisibility'

Learn how personal and commercial rent reporting increases credit scores by an average of 60 points, helping those most in need of a boost.

At a glance:

Increasingly, Americans are waiting to have children, delaying marriage, and subsequently spending more time renting rather than buying their first homes. Where you’d be getting recognition for on-time payments for car loans, credit cards or mortgages, until recently personal and commercial rent payments, the largest monthly expense for many consumers, hasn’t played a role in improving their financial standing. However, the growing number of rent reporting options is a gamechanger, especially for credit invisibles, or those who either do not have a credit file at a nationwide consumer reporting agency—TransUnion, Experian, or Equifax —or who don’t have enough data in their credit reports to generate a credit score. 

Business rent reporting to credit bureaus is a relatively new concept, but it has already proven to be a major benefit to landlords and tenants alike. By including rent payments in credit files, consumers are able to improve their credit score, giving them access to better financial opportunities and a improving their chances of getting approved for loans or credit cards. According to a TransUnion study, consumers experienced an average increase of nearly 60 points to their credit score when rent payments were included in their credit file. This is a significant increase, especially for those who are working towards building their credit report or improving their credit score.

According to Dr. Michael Turner founder, president, and CEO of the Policy and Economic Research Council (PERC), “For most Credit Invisibles, it is virtually impossible to access the affordable mainstream credit needed to build assets through homeownership and/or owning a small business. An estimated 54 million Americans are credit invisible and must have their real credit needs met by high-cost lenders, such as pawnshops, check cashing services, and payday lenders. Globally, we estimate there to be approximately 4.1 billion Credit Invisibles.”


What is rent reporting?

Rent reporting refers to the practice, started around 2014, of reporting a tenant's commercial office and/or personal rental payment history to a credit bureau. This means that a landlord or property management company can share information about a tenant's rental payment history with one of the major credit bureaus such as TransUnion, Experian, or Equifax. This information can include the date and amount of rent payments, whether payments were made on time, and any late or missed payments. Rent reporting is designed to give tenants the opportunity to build their credit history and improve their credit score by demonstrating their ability to make timely payments.

The Benefits for Tenants

Increased Credit Scores

One of the biggest advantages of rent reporting is that it provides tenants with an opportunity to establish or improve their credit scores. In fact, TransUnion found in a 2021 analysis of the consumer population that 60% of renters may see their credit scores increase as early as the first month of rent payment reporting. When landlords report rent payments to credit bureaus, tenants are given credit for making payments on time, even if they have no other credit history. This can be especially beneficial for renters who are just starting out - 9% went from unscorable to scorable, with an average score of 631 - or for those who have faced financial difficulties in the past. The same analysis found that 12% of consumers shifted to a higher score tier when rent payments were added to the credit file, especially among subprime consumers (VantageScore 3.0 range of 300-600), who were reclassified as near prime.

Positive Credit History

For many Americans, rent payments are their largest single monthly expense. Getting recognition for on-time payments could provide a significant boost to their credit files. This is especially important for those who are new to credit or who have limited credit history. Consumers often incorrectly believe that their credit report and credit score are the same thing. A credit report is a detailed record of a person's credit history, including their payment history, credit utilization, and credit accounts. A credit score is a numerical representation of a person's creditworthiness, based on information from their credit report and other factors. In short, a credit report is a detailed document, while a credit score is a single number that summarizes a person's credit history. Adding open, positive credit accounts to a consumer’s record can help build a positive credit report. And what’s more, some rental reporting companies offer to record historical payments made up to 2 years prior, and tenancy start dates of up to 5 years ago - instantly adding to two of the major components of the credit score: positive payment history and length of credit accounts - making it easier for tenants to obtain loans, credit cards, and other financial products in the future.

Increased Financial Inclusion

In addition to improving credit scores and encouraging on-time rent payments, rent reporting can also increase financial inclusion. Many people who are considered “credit-invisible” due to a lack of credit history are unable to access many financial products and services. Turner says, “The inclusion of this information into the consumer reporting ecosystem is a win for everyone, especially borrowers because they give the credit that they deserve for making payments. This positive payment history can bring millions of credit-invisible persons into the American financial mainstream.”

Rent reporting to credit bureaus offers numerous benefits to renters and commercial lease holders. By improving credit scores, encouraging on-time rent payments, and increasing financial inclusion, rent reporting can help renters access new financial opportunities and achieve financial stability. If your landlord doesn’t report your commercial or personal rental payments, consider joining an organization like the USBA. Members receive free personal and commercial rent reporting as part of their membership, and historical rent reporting upon request.


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