How to Boost Your Credit Score Using Your Rent and Utility Payment History
If you have bad credit or own a business attempting to establish credit you have probably been advised that paying your rent and utilities on time will help you establish a good credit history. While that is sound advice, it also leads to more questions. The most logical being: How do I know if the credit reporting agencies are even tracking those payments?
Until fairly recently, credit reporting agencies only learned about your on-time payments if your landlord or utility took the time and energy to report those to the major credit bureaus. While a few utilities made an effort to report on-time payments, almost no landlords did. Since you cannot self-report payments to the credit bureaus, that pretty much meant that the only times the agencies heard about your payment history was when your landlord or utility reported missed payments.
Fortunately, over the past decade that has changed and it has become significantly easier to ensure your good payment histories for rent and utilities are reported to the credit bureaus, but it requires some effort and money on your part. We will discuss your options in more detail below.
Experian’s Boost Service Will add Utility Payments to Credit Reports
Experian became the first credit bureau to include on-time utility payments in its credit reports when it began offering its Experian Boost service in 2010. If you subscribe to the service Experian will give you credit for making your utility and phone payments on time on the company’s credit reports. Plans start at $5 a month.
There are reports that TransUnion has begun offering a similar service, but it is not clear from the company’s website that they have begun monitoring utility payments or if an additional fee will be involved. Equifax does not take utility payments into account when issuing credit reports.
There are also services available that will report your utility payments for a fee. Probably the best-known of these services is Simplebills, which allows customers to manage all of their utility bills in one place.
How are Rental Payments Used by Credit Scoring Companies
If your rent history has been reported to one of the three major credit bureaus they will include that information in their credit reports. Those credit reports are then used by the two largest credit scoring companies–FICO and VantageScore–to calculate the credit scores that are most often used by lenders and credit card companies.
The good news is that If VantageScore receives the information from a credit bureau it will use your rental history when calculating its credit score. Unfortunately, the version of the FICO score most often used by lenders does not include on-time rental payments in its calculations, even if they have been reported to the company. Newer FICO products, like FICO 9 and FICO XD, do use that information but are not as popular.
Getting Your Rental History to the Credit Bureaus
While you are unlikely to persuade your landlord to report your payments, there are several services that will do so for you.
ClearNow will debit rent from a customer’s checking or savings account at no cost to the tenant and report the payment to Experian RentBureau. However, your landlord must have signed up for the service.
While it is only free for a limited time, the Zingoautomated payment app will report a user’s rental payments to Equifax if they are made to a property management company. To take advantage of the offer users must link the app to their financial accounts.
The paid services for reporting rental payments to the credit bureaus will provide you with more options. They include the following popular services:
These services usually charge an enrollment fee of between $25 and $145 and a monthly fee of between $7 and $10. In return, they will report 24 months of your prior rent payment history to Equifax, TransUnion, or both.
Tags: Credit, Credit Score, Finance, LoansCategorised in: Credit
This post was written by Sean Allaband