Does Paying Rent Build Credit?

By Rory Ackerman •  Updated: 10/10/22 •  11 min read
Filed under: Credit Score

Making timely payments help increase your credit score, so it comes in handy that necessary monthly payments like utility bills or phone bills also get reported to your credit history. However, if you are renting, there’s one big question – does paying rent build credit?

Paying rent builds your credit but only if you are doing it through a rent reporting service that submits payment reports to credit bureaus. Since paying rent is a necessary payment, why not take advantage of it and use it to boost your score? 

This guide will tell you how it works, as well as discuss some important details behind the question itself.

Impact Of Timely Payments On Your Score

If your rent payments get reported to the credit bureaus, your credit score can substantially increase. Timely payments make for one of the best ways of maintaining a good credit score and improving it in case you have a bad score.

Paying Apartment Monthly Rent

That being said, it’s no wonder that payment history makes up for 35% of your total credit score. Your payment history includes all the payments you make that are reported to the bureaus.

While it can be a huge boost for your score, missing a rental payment by more than 30 days past the due date can result in a huge negative strike on your credit report.

Missed payments can stay on your credit report for more than 7 years, leaving a long-lasting stain on your report.

Moreover, it serves as a negative indicator for future creditors or landlords in case of a missed rental payment.

So, to keep your creditworthiness at the highest level possible, you should always make payments on time. If you do so, you can expect rental payments to truly raise your credit score in the long run.

Checking If Rent Payments Will Reach Your Reports

When renting an apartment or a house, it all depends on your deal with the landlord. If you are doing it according to law, your landlord needs to pay taxes on income earned from your payments.

So, you won’t be under the radar like paying in cash, and while it might be a bit more expensive, you can turn it into your advantage and have the payments reported to the three major credit bureaus.

The first step towards achieving this is to pay your rent through a rent-reporting service. Of course, you’ll also need to discuss this option with your landlord, since they have to sign the agreement as well.

In this case, you’ll be paying rent to the landlord through the rent-reporting service. Most rent-reporting services charge monthly fees, but it can all be worth it for your credit score.

The rent amount with deducted fees will be transferred to the landlord, and payment information will be passed on to the credit bureaus. This way, rent payments can appear on your credit report as on-time payments, just like utility bills or credit card payments.

Your rental history can then affect your credit scores and you can use it to repair your score if it’s gone down. The best way to boost your score is through a history of on-time payments, and at least you won’t have to pay any interest by using your rental payments for the cause.

How Rent-Reporting Agencies Work

If you wish to use rent payments as a way of increasing your credit score, you’ll have to rely on a service to report rent payments to bureaus. Rent-reporting services will usually charge a monthly fee in exchange for submitting payment details to bureaus.


However, you might even save on these fees in case your landlord is already enrolled in the rent-reporting program. You’ll need to have your landlord agree with this way of making a payment.

They will receive the payments from the reporting agency after you submit the payment, and the rent-reporting service will make sure the payment shows up on your credit reports.

To do that, you should also be careful when picking the preferred rent-reporting agency. Not all agencies report to all three credit bureaus.

On the other hand, their fees also vary, so you should browse through the options before picking the right one. Make sure that the agency reports to all three credit bureaus, for the payments to affect your credit reports.

After a couple of months of using the rent-reporting service, you should be able to see how rental payment history affects your credit score. 

You should also use your right under the Fair Credit Reporting Act to ask for free copies of your credit reports. This way you can ensure that the rent payment listings have reached your reports and affected your score.

Rent Payments And Credit Score Models

Now that you know that on-time rent payments can affect your score, it’s time to deal with some details you might not be familiar with. First of all, there’s the credit scoring model used when determining your creditworthiness when it comes to specific creditors.

Credit scoring models use different information from your report to determine your creditworthiness. However, not all lenders use the same credit scoring models, and the bad thing is that your rent payments won’t be included in all of them.

For instance, FICO score 9 and VantageScore 4.0 models use rental payment information when building up your score.

It also depends on your creditors and their requested credit scoring models when evaluating your creditworthiness. For instance, a future landlord might require a credit scoring model like FICO score 9 which includes information regarding previous rent payments.

Your best shot of ensuring that rent payments help improve your score is to choose a rent-reporting agency that reports to all three credit bureaus.

This way you’ll have the highest chance of the information affecting your credit report.

Reporting Past Rent To Credit Bureaus

If your credit history isn’t full of timely payments that can boost your score, you can report past payments to the bureaus and make them count.

Sadly, you can’t report present or past rent payments to the bureaus yourself, so you’ll have to use a rent-reporting service in this case as well. Sometimes, there’s a limit on past rent payments you can report, so make sure to inquire about it once you apply for the service.

Here are just some of the rent-reporting services that offer you a chance to report past rent payment listings going at least 12 months back:

Some rent reporting agencies even let you report rent payments going back up to 24 months. If you don’t have the landlord’s information that the agency can verify, they can check your credit card and checking account for recurring payments.

These can be classified as rent payments and you can still get them on your credit report to boost your score.

So, the service you get from a rent-reporting agency is certainly worth the price, and you should only make sure to pick a trustworthy option before applying.

If you have a previous rental history you wish to get on your report, you should look for rent-reporting services that report past rents up to two years to credit bureaus.

How To Choose The Best Rent-Reporting Service?

Rent-reporting agencies aren’t like any other financial institution that you can inquire about based on their reputation. Of course, it provides some insight into the service if it’s a reputable company, but there are many other factors you should consider.

There’s also the situation where a landlord picks a rent-reporting service before you even start paying. In such a case, you should do some due diligence about the company before you start paying rent. Here are some important determining factors of a quality rent-reporting service:

1) Make Sure They Report To All Three Bureaus

One of the most important things to look for when picking a rent-reporting agency is to confirm that they report to all the major credit bureaus. This includes Experian, Equifax, and TransUnion, and you’ll be able to check it by taking a look at your free credit report from each bureau.

Rent reporting services sometimes just report to one or sometimes two bureaus, but you’ll still want to go with one that reports to all three. You never know which bureau a future creditor will use when pulling your credit history and credit report.

On top of that, every bureau uses a different credit scoring model. We already discussed how it all depends on the exact credit model used to determine whether your rental information will affect your credit score.

For instance, Equifax uses a VantageScorer model which is similar to FICO scoring models, but it uses slightly different metrics.  

If the service is reporting rent payments to every important credit bureau, you’ll have the highest chances of rent payments helping you build your credit.

2) Total Fees You’ll Have To Pay

You also need to consider the total fees you’ll need to pay since there are many rent reporting services that could include a few extra costs.

This mostly refers to a setup fee, which can be around $50 on average, plus all the monthly fees included. Also, some services charge extra costs for tracking and reporting your past rental history going back up to 24 months.

It is bothersome, but at least you’ll know what you are paying for in this case, since you can see a rapid credit score boost after reporting your previous rent payments.

3) Access To Your Credit Scores Through The Service

Some rent-reporting services can even offer the services of checking your credit score. It’s a useful feature to look for, especially if you are looking to build credit through rent payments. 

However, you should also know that a single missed rent payment can negatively reflect on your credit scores. A missed payment can leave a mark for 7 years on your payment history, and it could also really lower your score.

So, make sure you can afford the property and that you have a detailed payment plan before you get your rental history reported.

You will also be able to get to know which credit scoring models use information from rental payments through the service. This makes it much easier to calculate the benefits of timely rental payments on your credit score by knowing the model that a creditor uses.

How Fast Can You Build Credit Through Rent Payments?

Just like with any other type of payment, you can build up your credit within a few months after getting your rental history reported. Credit bureaus usually update the information on your report after 30 days once your credit card accounts get updated.

Build Credit Through Rent Payments

In the case of reporting previous rent payments, you might be able to expect the results even faster. Namely, some rent-reporting services have stated that you can expect an increase from 30 to 100 FICO points within the first month upon reporting past payments!

Of course, it also depends on your credit score level before updating rental payment information, but it’s quite an effective way of boosting your history of timely payments.

It’s especially useful for consumers with a bad credit score since every on-time payment counts towards earning a higher score in this case.

Final Thoughts

So, there you have it – now you know all the essential details on how rental payments can help you build credit. Having your rental history reported to bureaus can have a great influence on consumers with bad credit or those that are just getting started.

There’s no better way of getting started with your credit history than adding timely payments that don’t come with any interest rates, unlike credit repair loans. Having in mind that you are either way going to pay for rent, why not try to make the most of it by reporting every payment?

Frequently Asked Questions (FAQ):

Does paying rent improve credit?

Yes, paying rent improves your credit but only if you get the payments listed on your credit report. You can do it by using a rent-reporting service and paying your rent via the service. Your landlord will get the rent amount and the agency will report the payments to the credit bureaus. The only downside is that you have to pay monthly fees, but it’s still worth it as a credit boost.

How much do rent payments affect credit scores?

Once you get the rent payments reported to credit bureaus, it affects your credit history and payment history like utility bill payments or credit card payments. So, it affects 35% of your total credit score, and missing a rent payment can stay on your report for up to 7 years, just like any other type of payment mentioned.

Can I self-report rent payments to credit bureaus?

No, you sadly can’t report rental payments to bureaus and have them affect your credit scores on your own. You’ll have to use a rent-reporting service to get the payments reported to bureaus, as it’s the only way to get rental payments recognized on your credit reports.

Is it worth reporting rent to credit bureaus?

Yes, it’s worth reporting rent to credit bureaus as it can substantially affect your credit scores. It’s a good way of building credit if you have a poor credit score, and can affect your rating by up to 100 points. Rental payments reflect on your credit reports just like any other type of payment, and that’s why it’s convenient to have them reporting to boost your payment history.

Rory AckermanRory Ackerman

Rory Ackerman

Hi, I'm Rory! I've worked in the banking industry for quite some time and wanted to help provide my expertise with all things credit related. In my spare time I like to play video games and collect sports cards.

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