A program aimed at affordable-housing residents helped tenants raise their VantageScore 3.0 credit scores from Experian an average of 42 points — by reporting their rent payments to the major credit bureaus for an average of four months.
The pilot program involved renters in a low-income housing development in Salt Lake City and was run in part by Goldman Sachs and the Credit Builders Alliance, a consumer-focused nonprofit. Participating tenants began the program with VantageScore 3.0 scores averaging 615, a representative from CBA said. About four months later, after having their rent payments reported, those scores averaged 657. It’s important to understand that a credit score increase is not automatic with rent payment reporting — outcomes can vary depending on the timeliness of payments and other credit behavior.
The pilot program reflects a growing effort by both lenders and consumer advocates to help people with lower credit scores build their financial profiles. For consumers, the goal is greater access to credit — for lenders, it’s expanded market opportunity.
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How can adding rent payments help build credit?
Rent payments can be reported to the three major credit bureaus — Equifax, Experian and TransUnion — with some newer credit scoring models using rent payment info in the calculation of credit scores. But while groups like the Credit Builders Alliance are trying to help mainstream rent payment reporting, not many landlords have jumped on the bandwagon.
Still, there’s evidence of a continuing push in that direction. A small pilot study in 2017 by Experian and the City of New York found that 76% of renters whose payments were reported would see their VantageScore 3.0 scores from Experian improve.
And a recent survey from TransUnion showed many renters are interested in having their rent payments reflected in their credit reports. That survey found 67% of renters would choose to rent from a property that offered reporting of rent payments to the credit bureaus — and 73% of renters surveyed said they’d be more likely to pay their rent on time if their payments were reported to a credit bureau.
What can you do to work on your credit as a renter?
If you’re a renter looking to improve your credit but your landlord doesn’t report your rent payments, consider these ideas.
- For a small monthly fee, there are services that can report your rent payments to the three major credit bureaus. Of course, if you go this route, you’ll want to be sure to make your rent payments on time.
- Taking a cost-free approach, you can try Experian Boost, a service that links with your bank account to report utility and phone service payments. While this service only reports to Experian, it could be a way to work on your Experian Fico 8 credit score.
Also at no cost, if you sign up for Credit Karma, you can check your VantageScore 3.0 credit scores from TransUnion and Equifax on Credit Karma along with your credit reports from Equifax and TransUnion any time.