Whether you’re a novice rental manager or a seasoned landlord, you will encounter various occupants, from renters who pay on time to tenants who struggle to meet their deadlines. No matter which kind of resident you end up with, it is crucial you document and share this information with the proper credit institutions to ensure a tenant’s credit score accurately reflects their payment history and habits. Here are six steps on how to report rent to credit bureaus:
- Understand the importance of reporting rent payments
- Collect your rent payment data
- Consult with your tenant
- Compare services and ask questions
- Choose a rent reporting service
- Sign up and report the rent payments monthly
1. Understand the Importance of Reporting Rent Payments
As you navigate the rent payment reporting process, your role as a landlord or property manager is integral to developing your tenant’s credit score. Rent reporting services pass the information you provided onto the credit bureaus, and that data becomes part of your tenant’s permanent credit history. This record will stick with your tenants for life, so reporting accurate payment data is significant and can negatively or positively impact them.
For example, you have a responsible tenant who pays their rent on time every month. This behavior demonstrates financial dependability—so reporting their positive payment history to a credit bureau can help boost your tenant’s credit score. Simply paying their rent to you every month will not inherently move the dial. Through proper reporting, you and your tenant can change their credit profile for the better.
2. Collect your Rent Payment Data
It is standard procedure for major credit bureaus to request records showing your renters made their on-time rental payments, with the primary three including:
You can provide this data to them in several ways, though it depends on the rent reporting company you use. Here are some options to find rent payment data:
- Online rent payment portal
- Canceled checks indicating rent payments
- Money order receipts
- Written receipts showing the amount of paid rent, date, and your signature as the recipient of the rent
- Rental agreement
- Verification-of-rent form filled out and signed by the landlord
- Reference letter showing address, rent payment amount, length of rental agreement, and payment history.
3. Consult With Your Tenant
Be mindful tenants can also report their rent payments to credit bureaus, but they might require your assistance to complete the process. Some rent reporting services won’t even create a report unless you verify your tenant’s payments first. If you have already chosen a service to use for reporting rent, inform your tenants about this selection so they can take the necessary action.
4. Compare Services and Ask Questions
If you have not already chosen a company to use, you will need to compare rent-reporting services until you find the right one. The best way to go about this is by comparing their prices, features, and services. During your inquiry, you should ask each financial institution questions—using their answers to help you make a more informed decision. Some of the questions you should ask include:
- What would my total costs be for an entire year of service?
- Are there any setup fees or fees for reporting past rental history?
- Which of the major credit bureaus do you report to?
- How will you protect my personal data?
- Can I freely access my credit scores? If so, which scores can I access?
- How do I cancel my service and is there a cancellation fee?
- How soon can I expect the updated information to appear on the credit report?
- What happens if I get into a dispute with my tenant or they break the lease?
- Does this service include a tenant’s rental history?
5. Choose a Rent Reporting Service
Choosing the most suitable rent reporting service can be challenging. There are so many institutions for you to consider, each one vying for your business. They also charge different fees, with a few being completely free. Here are some of the most notable companies and the credit bureaus they report to:
Credit Sesame
- They verify the property management company.
- Reports to: Equifax and TransUnion
Esusu
- Sign up for an account and then collect rental payments via the company’s app.
- Reports to: Equifax, Experian, TransUnion
MoCaFi
- This service is free when you use the mobile app.
- They verify the payment data through online research and a phone conversation.
- Reports to: Equifax and TransUnion
Piñata
- Renters can use this service for free.
- Reports to: All three major credit bureaus if the landlord signs up.
Other Notable Renting Services
ClearNow
- Requires the landlord to sign up. This service debits the tenant’s rent from their banking account, at no cost to themselves.
- Reports to: Experian RentBureau
PayYourRent
- Property management companies usually pay any applicable fees.
- Reports to: Equifax, Experian, TransUnion
Rent Reporters
- A one-time enrollment fee costs $94.95 and includes two years of rental payment reporting. There Is a monthly and annual plan you can opt into as well.
- Reports to: TransUnion and Equifax
Rental Kharma
- The startup cost is $50, which includes six months of rent history, and then it is $8.95 monthly.
- Reports to: TransUnion
PaymentReport
- Service has a $49 enrollment fee, providing two years of rent reporting. After that, the service is free.
- Reports to: Equifax and TransUnion
LevelCredit
- It has a $6.95 monthly fee to report rent and utility payments. A one-time fee of $49.95 provides a past rent lookup for up to 24 months.
- Reports to: Equifax and TransUnion
CreditMyRent
- This service charges a $14.95 fee per month, with additional fees for past rent reporting.
- Reports to: TransUnion and Equifax
Rock the Score
- This service has a $48 enrollment fee and then $6.95 monthly. There is also a $65 fee for two years of past rent reporting.
- Reports to: TransUnion, Equifax (with a landlord serving as the property manager)
6. Sign Up and Report Rent Payments Every Month
After choosing a rent reporting service, you sign up on the company’s website and send in your tenant’s rent payment records every month. The rent reporting service will take care of the rest by forwarding your data to the major credit bureaus on your behalf.
Do Rent Payments Affect a Tenant’s Credit Score?
Rent payments do not directly influence a tenant’s credit score. If no one reports it, how will the credit bureaus know? However, reporting rental habits will affect a tenant’s credit score over time. The same applies to tenants who consistently make late payments. This data will negatively impact their credit score, cause them to lose points, and limit their access to loans, investments, and other financial endeavors.
Credit scoring institutions like FICO and VantageScore may use credit reports to generate an individual’s credit score.
Can Tenants Build Credit by Paying Their Rent On Time?
When you report information showing your tenants make rent payments on time, it will help build their credit. A high credit score is invaluable because it makes it easier for individuals to access better financial benefits and services.
How is Rent Payment Information Used?
Many credit bureaus receive updated rent payment data every 24 hours from sources like rent payment reporting services and property management companies. Screening companies and landlords then use this information when reviewing applications and performing rental credit checks for potential tenants. It helps them choose candidates who pose the least amount of risk and have a history of being reliable and consistent.
Frequently Asked Questions
What are other ways tenants can build credit?
Aside from reporting rent payments, tenants can also pay rent with a credit card to build their credit. Inform your tenants they need to pay the complete balance every month to stay on a positive track. Renters should adopt good credit habits when using credit cards to increase their score.
Can renters stop reporting their rent?
Generally—yes—but it depends. Under some circumstances and jurisdictions, tenants will need to provide you with a written request to cease reporting their rent payments. Sometimes renters must wait six or more months before restarting rent reporting with their landlord.
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