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Should You Report Your Rent Payments to Credit Bureaus?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Building credit can be a frustrating endeavor for many: Too short a credit history or too low a score, and you’re bound to be excluded them from many lending opportunities.

At the same time, it’s a truism that one of the very best ways to build credit is to use credit. This gets complicated, though, for those struggling to stay on top of loan payments or even get approved for credit because their credit file is too thin.

One potential answer? Some consumer advocates are pressing landlords to report tenants’ on-time rent payments to the credit bureaus.

In recent years, property management companies and landlords across the country have individually started using electronic payment services that let tenants have their payment information reported to credit agencies including the big three: Equifax, Experian and TransUnion.

It’s still a long way from a ubiquitous practice, but it is catching on.

Recently, the New York City Comptroller’s Office issued a proposal to give all New York tenants the opportunity to add their rent payments to their credit reports using an opt-in system. (Some two million households in the city pay rent every month.)
Through the proposed program, the city hopes to improve economic opportunities for renters, especially those lower-income residents with poor credit or no real credit history facing limited access to common financial services.

For people who may have a thin credit file, or whose negative credit behavior has dragged down their scores, adding rent payment information to credit reports could be a welcome boost. An estimated 76 percent of New York City renters who have chosen to report their rent payment to credit bureaus will see their credit scores improve by more than 11 points, according to the Comptroller’s Office. Many others might not see a numerical change, but would nonetheless add depth to their credit histories, the office added.

A 2014 TransUnion report suggested that eight in every 10 subprime consumers — whose who may be considered having higher credit risks — experienced an increase in their score one month into their new apartment lease.

Of course, the opposite might be true if tenants slip up and miss a rent payment or pay late. Credit expert John Ulzheimer cautions that this practice may hurt some consumers as much as it might help others. He calls the report’s 11-point increase findings “purely speculative.”

“This is another example of government not truly understanding the mechanics of the consumer credit reporting system and the potential downside to such a mandate,” Ulzheimer tells MagnfiyMoney. “The presumption is that rent will always help someone. That’s without basis.”

However, there’s evidence that reporting rental payments to credit bureaus might encourage renters to stay on top of their payments.

In a 2015 study of a rent reporting pilot program, researchers found rent reporting led to a higher timely rent payment rate among residents. The majority of the participants in the pilot program of more than 1,250 residents saw their credit scores increase, though 14 percent of them didn’t experience any change, and another 7 percent even experienced a drop. The study was piloted by Credit Builders Alliance, a national nonprofit dedicated to helping low- and moderate-income households and businesses build credit and financial access.

How to report your rent payments to credit bureaus

Get your landlord involved. If you are renting, ask your property management company or landlord about whether rental data is being reported to credit bureaus. Some may work with rent payment services that share information to some or all of the three major credit reporting bureaus and some pay a fee — if there is one — so that it’s free for tenants. These services allow landlords to collect rent electronically. They also give renter the option to report his/her payments to credit agencies.

Take matters into your own hands. If your landlord or property manager doesn’t report rental data, urge him or her to do so. Meanwhile, you can enroll in a rent payment service yourself. With some services, you can tell the agency the rent amount and its due date. And the firm will deposit the money into the bank account of your landlord or property manager for you. With others, they don’t process your payment, but only verify your rent history with your landlord and do the rent reporting. Just watch out for fees, as they will might charge registration, wire transfer or other fees for paying via credit or debit.

The list of agencies below report rental data to credit agencies, with a cost ranging from free up to $10 per month. You will have to opt in for credit reporting. Some report payments to all three credit bureaus, and others only do so with one.

Company

Who signs up?

Fees

Which credit bureaus
they report to

RentTrack

Renter

$6.95 for payments made
via ACH transfer
2.95% per credit card payment
2.75% per debit card payment

 
 

Rental Kharma

Renter

Sign-up fee: $25 per person

$6.95 per month for ongoing reporting

Rent Reporters

Renter

Sign-up fee: $94.95 per person,
$9.95 per month for ongoing
reporting

ClearNow

Landlord

Free

PayYourRent

Landlord

$9.95 per month
2.75% per credit card payment

 
 

RentPayment

Landlord

$4.95 per eCheck
2.95% per credit card payment
0.95% per debit card payment

PayLease

Landlord

$0-$9.95 per eCheck
(Rate set by the property
management company)
3.5% per credit/debit
card payment

 

eRentPayment

Landlord

$3 per transaction
Or $10 per month (up to 5 transactions)

 

Rentler

Landlord

$1.95 per transaction
2.9% per credit card payment
1.9% per debit card payment

Should you pay to have your rent payments reported to credit bureaus?

As you can see from the table above, there are a few services that allow tenants to take the initiative on reporting.

But the cost might not be worth the potential benefit. Rent Reporters, for example, charges a hefty sign-up fee just shy of $95. On top of that, you’d have to pay close to $10 each month for ongoing reporting.

There may be other better low-cost ways to improve your credit:

Applying for a secured credit card
To open a secured credit card, you have to provide the bank with a deposit (typically $200 or more). The bank will keep the deposit as collateral and give you a credit limit equal to your deposit. Once open, this card works just like any other credit cards. Your credit limit, balance and payment information are reported to the credit bureaus. But if you don’t pay your credit card on time, the bank can take your deposit and apply it toward the debt.

Check out our secured credit card database here.

Getting a store card
You might have been asked if you’d like to open a credit card at various department stores. Those store cards usually come with really high interest rates, but there is a big perk: Approval of people with low credit scores is more likely. Once you get a store card, make sure you only use it to make one small purchase a month and pay it off on time and in full. If you find it difficult to resist temptation, unsubscribe to emails about deals and don’t even carry your plastic around with you.

Opening a college credit card
If you are a college student, you can apply for a credit card, perhaps by having a parent co-sign, or take out a loan to help cover education costs. You can find a list by filtering for college students on our Cash Back Rewards page.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Shen Lu
Shen Lu |

Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at [email protected]

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Federal Student Loan Rates to Ease Back Down for 2019-2020

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

After back-to-back increases in the previous two summers, interest rates for federal student loans are headed lower for the coming year.

Congress sets federal student loan rates each spring, based on the yield of the benchmark 10-year Treasury note, and the new interest rates go into effect on loans disbursed from July 1 onward.

While the Department of Education had yet to post the new rates on its site, news reports put the decreases for July 2019 to June 2020 as:

  • Undergraduate Direct Subsidized and Unsubsidized Loans: 4.53% (down from 5.05%)
  • Graduate Direct Unsubsidized Loans: 6.08% (down from 6.6%)
  • Graduate PLUS and Parent PLUS Loans: 7.08% (down from 7.6%)

Federal loan interest rates last declined in July 2016, with the undergraduate direct loans falling by about half a percentage point to 3.76%, for example.

Federal student loans also come with loan origination fees, but those generally change in October. For the 2018-19 period they were:

  • Undergraduate Direct Subsidized and Unsubsidized Loans: 1.062%
  • Graduate Direct Unsubsidized Loans: 1.062%
  • Graduate PLUS and Parent PLUS Loans: 4.248%

For more on the true costs of federal student loans, check out our complete guide, including all the various types of loans and strategies for repayment.

This report originally appeared on Student Loan Hero, which like MagnifyMoney, is part of LendingTree.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

MagnifyMoney
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Have a question to ask or a story to share? Contact the MagnifyMoney team at [email protected]

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