Landlords Do Not Report To The Credit Bureau’s – True or False?
Does your landlord regularly have to knock on your door to remind you that you are way past your rent due time? If you think it doesn’t matter that you’re late with your rent because it isn’t going to be included in your credit report anyway, then you’re thinking wrong.
Most consumers may not have realized that there has long been specialty consumer reporting agencies that did and still do track rental history. Those specialty agencies would then sell that information to creditors, employers, and others. But non-payment of rent only made it into credit reports as a result of being sent to the collection agency. Consumer’s may have mistakenly believed it was the three major consumer reporting agencies, commonly known as credit bureaus, collecting the information leading to collection or being denied for a lease.
When did it change?
The long and short of it is that credit bureaus, are now making rental data matter to your credit record. The purpose is now two-fold: to help those who are building their credit history, and to make landlords’ lives a little bit easier. So, although landlords may not necessarily report to the credit bureaus directly, there is now a way for the information to be automatically processed.
It used to be that “non-traditional” payments, such as those concerning rental payments, were left out when landlords ran a credit check. In fact, mortgage payments used to be the only kind of housing payments tracked by the three major credit bureaus. But then, seeing as how more people were in need of a good word or two in their credit reports, Experian decided to give due credit to those residents who pay their rent promptly.
In 2012, the NY Times reported Experian helped to raise the credit scores for many people. Soon other consumer reporting agencies like FICO began to track both negative and positive rental histories and include them in credit reports. It was also reported, perhaps in response to the competition, that Experian who had not done so for two years, would be adding non-payment to their reports.
The RentBureau is Experian’s brainchild, designed with the specific function of keeping track of residents’ payment record to their respective landlords. As a specialty division, it is in charge of gathering “payment data from a network of property managers covering more than 8 million renters nationwide.” Renters who are very particular about checking their credit report will soon find their monthly payment of rental dues reflected on their account.
How it works
For those who are not accustomed to paying their rent on the dot, whether it is through the RentBureau or the other agencies now including the information, this is going to be problematic because then every negative record will be added to their credit information. However, for those who take pride in being able to pay right on time, this means good news, essentially because it is going to boost their credence to creditors.
Landlords also can benefit from this system because at least now, there is an added compelling reason for their tenants to pay up on time. Should the resident opt for the automatic deduction from their account, they will not be charged with the service fee attached to electronically-made payments. So all in all, it’s going to be a faster transaction, and freed up from constricting additional charges.
It’s not to say that your landlords will have a direct say on your credit when they report, but safe to say that their inputs, with this new system in place, will invariably affect your standing, both positively and negatively when a credit check is run.
This newly implemented system can be considered groundbreaking in the sense that credit reports will now be reflecting both positive credit and negative credit. In a sense, it sort of balances out the perspective for lending institutions, allowing for a better look at just how trustworthy a potential borrower is.
It’s also groundbreaking because in the history of credit bureaus, this is the first time that they are adopting a system like this. So far, it’s getting positive reviews, too, such that more partnerships are being forged along the way.
From the way it is set up, it looks simple in execution, but the effects are obviously very far-reaching. It may have been unintentional, but with rental payments now a part of credit reports, the system has introduced a self-policing mechanism for residents all over.
Now that the people are becoming more aware of the change and how it can affect them, they are becoming more mindful of paying their rents on time. Building credit, especially when you’re coming from the negative, can prove to be a challenge. But at least with positive reinforcement like in Experian’s RentBureau, it just might be the boost that you need to turn your credit record around.
It is also foreseen that lenders will want this piece of information, now proven to be vital, so that they can be better informed about the financial character of their potential borrower. This entire process of including rental payments in credit reports may still be in the evaluation stage at this point in time, however it already does appear to tug at the right strings, producing the right results. For those working on rebuilding a damaged history it has shown to be useful as mentioned above.
Improving your credit score
Of course, this is not the only way for you to improve your credit score. However, having a positive entry on your credit report will surely make things a bit easier for you, as opposed to just concentrating on negative input.
Ideally, you should at the same time also be working on clearing your debts, and that means becoming more aware of your expenses, updating your savings, and planning out a better budgeting scheme based on your income.