Timely payments are the most important factor in credit score, accounting for a full 35% of your credit score. While mortgage payments, car loans, and credit cards are all reported in this section, a huge missing component is rent.

rental property

Unfortunately, the three major credit bureaus do not have a section for rent payments and only 1% of consumers actually have this information reflected on their credit reports.

To make matters worse, late payments and evictions actually are reported, so really, renting has traditionally only had the ability to hurt your credit score, not help it.

Recently, though, new services have begun to report rental payments to one or more credit bureaus. But, does this information actually help you build your credit? In some cases, the answer is yes. Learn everything you need to know about building your credit with rent so you can take action quickly and effectively.

How can rent improve your credit?

Landlords and property management firms do not report rental payments to the credit bureaus, so there’s no way for an ongoing payment history to positively affect your credit score.

Several new online services, however, offer rent reporting that get your payments listed on your credit report.

Experian RentBureau collects rental payments for your credit report, while TransUnion lists the information directly onto your credit report. The catch, though, is that just because the information is there doesn’t mean it’s included in your credit score calculation.

Newer scoring models, such as FICO 9, FICO XD, and VantageScore do include reported rent payments in your credit score. The problem is that most lenders don’t currently use the newest scoring models; FICO 8 is still one of the most common models for lenders.

While some lenders actively seek borrowers with less than stellar credit, and therefore happily use reported rent payments, most prefer to use more traditional lending standards. Some rental reporting companies actual help customers find credit card offers from companies who do consider rental history.

If you’re trying to build your credit or improve your score, responsibly using a credit card is a good way to build up payment history on an account that is used in all scoring calculations. Just be sure not to accumulate tons of debt because you’ll inadvertently end up damaging your credit score even more.

What is a rent reporting service?

Individuals can’t report their own rent payments and landlords seldom do. Instead, independent reporting agencies gather information and report it to the credit bureaus on your behalf.

Another benefit of using a rent reporting agency is for securing a future rental property. All landlords much prefer candidates with a history of on-time payments, and this is an easy way to document your success. In fact, Experian RentBureau and TransUnion SmartMove are designed specifically for landlords performing background checks during the application process.

What are the most common services available?

There are countless services that report your rent to the credit bureaus. Each one has separate fees and some may only report to one or two credit bureaus. Still, others may require that your landlord or property manager sign up for the service. Take the time to do a bit of research on each one and then select the right option for you.

Rental Kharma

Rental KharmaRental Kharma allows you to have your rental payment history submitted to TransUnion. Your landlord or property manager confirms your payments each month in a quick and easy process. You can even use it if you split the rent — only your portion that you pay gets reported.

If you’re worried about how future late payments might affect your credit, they actually won’t unless you’re more than 30 days late. That’s because any rent payment within 30 days of the due date is considered on time.

Rental Kharma is also pretty quick. They report every two weeks, and then it can take up to a month for TransUnion to update your credit report. So within a month and a half, you’ll have positive payments showing up. You can also verify past payments to build an even longer history. To sign up for Rental Kharma, you must pay a one-time fee of $40, followed by $9.95 every month of verification.

Rent Reporters

RentReportersThis one comes with an easy signup process. Simply enter in your basic rental information and Rent Reporters will reach out to your landlord or property manager to verify your payments.

The information is then submitted directly to TransUnion. You can also verify up to two years of previous rent payments when you enroll, which the company claims can affect up to 50% of your credit score.

That service costs $99.95 for two years of history with a single landlord, plus an additional $75 for each additional landlord. Verification of your current rent costs $12.95 per month.

If you’re unhappy with the service, you can receive your money back within 48 hours of learning from Rent Reporters that your information has been added to your credit report. It’s unclear whether this means 48 hours from the time they submit the information to TransUnion or from the time the information is actually added to your report.

RentTrack

RentTrackThe unique feature of RentTrack is that it actually reports to all three credit bureaus. You also pay your rent online through RentTrack, either through e-check or credit card.

You can even set up recurring payments so you don’t have to worry about paying your rent on time. There is a fee for each transaction, which varies depending on your property manager and your type of payment.

Once you’ve made your first payment, you’ll need to verify your identity so that RentTrack can start reporting to the credit bureaus. Note that you’ll need to manually opt-in for Experian. If your building or property manager uses RentTrack, you might not have to pay for the service.

If you use the service on your own without going through your management company, then there are some fees. Pay by e-check and you’ll be charged a monthly flat fee of $2.95. When using a credit or debit card, you’ll be charged 2.95% of your rent amount. So on an $800 rent, your monthly fee would be $23.60.

ClearNow

ClearNowClearNow’s services are reserved solely for renters whose landlords or property managers have signed up. Once you enroll, your rent is automatically debited from your bank account on your predetermined due date.

The money is then transferred to your landlord and the payment is reported to Experian RentBureau.

You must opt-in for this service and payments aren’t reported until you’ve made four on-time payments through ClearNow. If you think your bank funds might be insufficient to cover the amount, you do need to contact them as soon as possible to try and cancel the payment.

PayYourRent

Pay Your RentSubmit your rent payment either online or through PayYourRent’s app as long as your property manager or landlord participates. If they don’t, you can supply their contact information so that PayYourRent can contact them and try to bring them onboard.

The cost can be incurred by either you or the property manager, so you have to find out what the specific agreement is with your building. The fee is typically 2.75% for each transaction. When using PayYourRent, you can opt-in to have your payments reported to Experian RentBureau and TransUnion.

PayLease

PayLeasePayLease also reports to both Experian RentBureau and TransUnion. The service is free but your property manager must already use PayLease and you have to manually opt-in.

Like some of other services we discussed, PayLease allows you to pay your rent online each month. You may incur a transaction fee depending on your property manager’s agreement with PayLease.

Is rent reporting right for you?

You really have to ask yourself if the cost is worth the gain. There’s no way to predict exactly how much your credit score will jump because of rent payments added to your report. Plus, future lenders might not even use a scoring model that is relevant to rent payments.

Still, if you’re looking for every point possible on your credit score, then a rent reporting service could be a big help, especially if you choose one that allows you to verify two years of rent payments because you’ll see a much larger boost.

Just make sure you fully understand all of the fees associated with it, as well as the company’s commitment to customer satisfaction. If you have a credit card, the cost of transaction fees might actually be offset if you’re enrolled in a strong rewards points program.

Just think — if your month is $1,000 each month, that would be an extra $12,000 worth of points you accumulate each year. Do the math and see if that outweighs the cost of the service.

Building your credit is an ongoing process, not a single action you take just one time. In addition to paying your rent on time, make sure you’re also addressing your other bills because they carry just as much weight on your credit report, if not more.

Credit cards, cell phone bills, and utilities all need to be paid on time too. Pair that with paying down your existing debt and you’ll watch your credit score continue to rise over time.