In 2023, first-time homebuyers drove home sales, led by millennials.
However, a number of people in that generation soon discovered that their money didn’t go nearly as far as it used to because of rising mortgage rates, which was the likely reason why more than 17 million millennials and 4.5 million Gen Z’ers decided to call a rental unit their home and lose out on the benefits of home ownership.
Specifically, they lost out on the benefit of raising their credit score by paying mortgages on time. But have they?
Since rents are rising faster than home prices, shouldn’t those people have the same advantage? That question is starting to surface. It’s not well-publicized – nor is it always easy – but it is doable.
Not easy vs. doable
The “not easy” side is that currently, renters can’t submit their payments directly to the credit bureaus for one thing. For another, some landlords and property managers do not report rent payments to credit bureaus.
“However, renters have the option to avail themselves of several free and paid services that will report rent payments to the credit bureaus on their behalf,” Severine Bryan, founder of Bryan Financial Empowerment LLC, told ConsumerAffairs.
“Free services include Self which reports to all three bureaus. Renters do not have to go through their landlord to use Self. It does have a paid tier that includes reporting utility and phone payments to the bureaus but those additional payments only report to TransUnion.”
Bryan offered two other “free” suggestions:
Pinata, which only reports to TransUnion through this method, but which landlords can use and report to all three bureaus.
PayYourRent is also free to tenants and reports to all three bureaus. But, landlords might shy away from this since they pay any fees charged by PayYourRent.
As for paid rental payment credit reporting services, there’s Boom Pay, RentReporters and Rental Kharma.
Paid services that report to all three bureaus include Boom Pay. Bryan says the beauty of Boom Pay is that for an additional small fee, it will capture and report up to 24 months of payments before signing up. Rental Kharma, on the other hand, only reports to TransUnion and Equifax.
“Before signing up for any of these services, tenants should verify which bureau they report to,” Bryan cautions.
“This is especially important if they are in the market for a loan and the loan servicer uses one bureau over the others. They should also verify if the loan servicer includes rent payments in their loan processes.”
A credit card solution?
Some credit experts poo-poo using credit cards to pay rent, but Sebastian Jania of Ontario Property Buyers suggests that one of the more atypical credit card benefits being offered is a way that renters can use their rental payments to up their credit score.
Jania alerted ConsumerAffairs to Plastiq, a company that will pay the landlord on or before the day that rent is due, and the owner of the credit card will have that balance along with a small fee added to their credit card for payment the next month.
“By doing this one is able to use a credit card and show the credit card company that they are able to use this card responsibly and have it paid every month which will result in improving their credit score over time,” Jania told us.
“Further, as the credit card company sees that they are making consistent payments, they may offer them additional credit products or an increase in credit limit which will reduce credit utilization and ultimately result in an increased credit score.”
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-01-04 13:10:43
