Anyone who has purchased a car or vehicle knows the importance of having a good credit history, but long-term renters may find themselves in a credit gap.
The Consumer Financial Protection Bureau estimates about 26 million Americans are "credit invisible," and have "no credit history with a nationwide consumer reporting agency."
Rent payments historically do not affect your credit, so a renter trying to boost their credit score to get a loan has limited options.
Some companies and services are trying to change that with tools renters may not be aware of.
In January, Zillow introduced a new feature allowing renters who pay their rent on Zillow to have on-time payments reported to the national credit bureau, Experian.
"We're really committed to empowering renters financially and helping simplify their housing journey," said Zillow's rental trends expert Emily McDonald, "whether they're renting, buying or selling."
Zillow's rent-reporting tool is free for the renter and the landlord. For its platform, McDonald said it's up to renters to decide whether to opt in.
"A landlord really doesn't actually have any step in the process," she said.
Other rent-reporting services are available to help renters build credit; ClearNow, PayYourRent, Rental Kharma, and Rock the Score are just a few of them.
Personal finance company NerdWallet shares a few things to keep in mind when choosing a rent-reporting service:
- Not all services report rent payments to all three major credit bureaus: Experian, Equifax, and TransUnion.
- Some services have setup fees or monthly payments that fall on the landlord, the tenant, or both.
- Credit report changes don't happen overnight, so you'll want to find out when your payment history will appear on your credit report.
For McDonald, reporting those on-time rental payments is about setting renters up for future success, "To not need a guarantor when they go to sign their next lease," she said, "to make those future larger purchases that we know are so important in everybody's financial journey."
