Rent Reporting is the monthly reporting of tenant rent payments to at least one of the major consumer credit bureaus for inclusion on a traditional consumer credit report.
Yes, the addition of rental payments as trade lines on a traditional credit report can help renters build or establish a credit score. There are no guarantees, but participants in a rent reporting pilot conducted by CBA from 2012 - 2015 saw an average credit score increase of 23 points. See our page on the impact of rent reporting here.
Neither actually. Rental information reported on the credit report functions as an open trade line. It has a recurring monthly set payment and does not calculate each monthly payment against any overall balance based on the lease.
All three credit bureaus—Experian, Equifax and TransUnion—accept rental data.
Newer scores including VantageScore 3.0 & 4.0 and FICO® Scores 9 and 10 are optimized for rental data. Older scores were designed before the reporting of monthly rental data was commonplace. While rental tradelines may appear as an item on reports using an older scoring model they are not typically incorporated into the score.
Generally, the resident must be paying some amount of rent (often the CRAs require a $10 minimum but this guidance is subject to change!). Other than that, ultimately, the decision to enroll in rent reporting should be in the resident’s hands. Rent reporting can be considered a low-risk strategy for residents working to establish or rebuild their credit profile and consistently pay their rent on time. Housing providers can equip residents with information they need to make an informed decision about their readiness for rent reporting.
It typically takes 45 to 60 days before reported rent payments appear on a credit report. For example, a resident’s October 1 payment should appear on their credit report by December 1.
If your properties receive(d) any federal subsidy, or your tenants receive federal subsidy for rent, the landlord/property manager cannot automatically enroll residents in rent reporting or require that they enroll. Residents must elect to participate and you must collect their consent as necessary. Whether or not you are required to obtain this permission depends ultimately on federal law and depending on the circumstances, HUD regulations. While CBA does not provide legal advice, we can offer information to help guide your understanding of your legal obligations.
Residents are typically able to opt out at anytime.
For those that already have multiple positive lines of active, open credit, rent reporting may not boost their score. The addition of a new rent reporting tradeline may cause a temporary dip because it shortens the average “length of credit history”: one factor among many that make up a credit score. In addition, payments over 30 days past due may be reported as late to the credit bureaus and can damage a person’s credit score. For this reason, it’s important to make sure a resident is a good fit for rent reporting before enrollment, and, once a resident is enrolled, maintain an open line of communication so they have access to support and can disenroll if need be.
On-time and late payments may be reported to the credit bureaus. A rental payment is generally deemed late by the credit bureaus if it is 30 days past due. Ideally, the housing provider has programs or systems in place that encourage residents to reach out to you ahead of time if they think they may be late or miss a payment.
No. Anyone obligated on the lease who is 18 years or older can enroll, but each person must opt-in themselves for the rental tradeline to show up on their credit report. This means that an individual can enroll, and their spouse or co-tenant can come to their own decision about opting-in.