According to the Pew Research Center, between 2006 and 2016, there were 8.7 million renters! In more than 20 big cities, there are more renters than homeowners.
Just like paying your mortgage in a timely manner, paying rent (and utility bills) in a timely manner can increase your credit score. Rental payments can be reported to Experian, TransUnion, and Equifax. Those are three credit rating agencies. In the FICO 9 model, paying your rent back 100% perfect can increase your credit by almost 20 points.
Receiving a “reward” for paying rent on time is something that is likely to encourage renters to do it consistently. If you are renting from a large property management company, they are likely in some type of relationship with a Rent Payment Service. This type of agency is likely to report if renters meet the payment deadline. If you are renting from a private landlord, it is less likely for a Rent Payment Service to know you are paying rent on time. There are some groups you can join – PayYourRent, Cozy, or RentTrack. These groups ensure that your rental payment is reported.
If you want to increase your credit score before getting a mortgage, a great way to increase it is by paying your rent on time, consistently! Not only will you raise your credit score, but you are likely to have lower interest rates for home loans (car loans and insurance too!) available to you.
