Military families rent homes more than they buy, thanks to a PCS cycle fixed on two to three-year moves. In recent years, the DOD has recognized the challenges connected to short-term duty stations and batted around ideas to keep families in one place for longer, but the status quo remains, which means service members continue to look for military rentals.
There are many great things about renting a house, but one of the downsides is that your monthly payments usually aren’t reported to the three big credit reporting bureaus: TransUnion, Equifax, and Experian. This means that your dependable rent payments haven’t positively impacted your credit scores and ratings.
In other words, you haven’t been rewarded for on-time payments on your credit report like you would have for other bills like credit cards or utilities. Without a demonstrated track record of on-time payments as a first-time home buyer, you could find it harder to get a loan without a glowing credit history.
Recently, rent report services have taken off in popularity. Now, your rental payments can boost your credit scores—if you or your landlord reports them to the credit bureaus through a rent reporting service.
For example, in 2021, Fannie Mae and Freddie Mac announced their partnership with Esusu Financial Inc. This service uses its platform to report the positive rental histories of multifamily unit renters directly to the credit bureaus. Since the program’s start, more than 514,000 renters reported on-time rent through the partnership.
Photo by Nate Meepian's Images from Canva.com
What Is a Rent Reporting Service?
Your rental payments aren’t directly reported to the credit bureaus. Instead, you or your landlord must use a third-party service that’s agreed to comply with the Fair Credit Reporting Act, which protects your information and lets you dispute incorrect data.
Some services are free, while you or your landlord pay for others. Depending on the company, you may pay a monthly or yearly subscription and have the chance to report past year's rental payment history. To make the most of a rent reporting service, you need to know which credit bureaus it reports your on-time payments to and which credit score agencies factor in those payments.
For more information, read Does Your Credit Score Matter When Renting a Home?
Why You Should Use a Rent Reporting Service
Basically, if you need to boost your credit score or start a credit history for any reason, like buying a house for the first time, you should consider using a rent reporting service if you pay on time each month. In today’s tight home buying market, first-time home buyers need every advantage to prove themselves worthy to home loan lenders.
Photo by nortonrsx from Getty Images via Canva.com
How to Find a Rent Reporting Service
First, you’ll have to decide whether you’ll take the reins and sign up for service as an individual or if you’ll include your landlord in the process. Luckily, reputable rental reporting companies have popped up over the last several years.
Individual
Although you’ll handle the rental reporting service account directly, including subscription or one-time fees, some companies ask that your landlord verify your lease and payments.
Landlord
Some landlords and property managers already use these services or could be convinced to use one by taking advantage of a rent reporting company's incentive, like automatic rent payment collection from tenants. You won’t pay the service directly, but your landlord could pass the fees onto you another way.
Free and Paid Rent Reporting Services
These services have a mixture of payment plans and landlord/tenant payee structures. Some are free for renters, and others charge monthly fees and add extra services renters need, like financial tools. Each has pros and cons, so you must review which plans work best for your situation. Here are some examples.
- Piñata: A free credit-building app that reports to all three major credit bureaus.
- PayYourRent: Landlords set up this account, which notifies all three bureaus. It’s free for renters.
- Esusu Rent: Reports to all three bureaus and has free and paid versions.
- Rental Kharma: A comprehensive rental reporting service with plans starting at $8.95 monthly plus a $75 registration fee.
Finally, renters have their due. After years of diligently paying your rent on time, you can take advantage of your good payment history. Reporting your rental payments will increase your credit scores and ratings and attract home loan officers who specialize in first-time homebuyers.
