It came as big news to me earlier this year when I heard that Experian would now be reporting rental payments. Folks have often said to me that they would love for their good rental history to show on their credit reports. But up until recently I always had to say "well, I'm sorry, but I'm just the messenger." For those of you who have great rental payment history the message has changed. Your ability to get those payments in on time will now be reflected on Experian's report. Vice President and Managing Director of Experian Rent Bureau Brannan Johnston, says that "given that one-third of the U.S. population rents, we felt it was imperative to reflect the true credit worthiness of those individuals who responsibly pay their rent."
This is great news should you need to move and find another rental. This reporting will also be very beneficial in helping you build more information on your credit report. But this reporting does not, however, come automatically. In order to get your information onto your report your landlord must use Rent Bureau, one of the nation's largest rent payment reporting companies.
While this will come as great news to those who always get their rental payments in on time, it may seem like a blow to those who struggle. For those of you who fall into the latter category, this news is not as bad as it sounds - at least for the next year. Only positive rental payment data will be added to credit reports - no lates or chargeoffs will be reported. Experian doesn't expect to add derogatory data until 2012.
If you're looking for a way to raise your FICO score the new rental payments now appearing on your Experian reports won't help. For now, Experian's new rental reporting will have no effect on your FICO score. And because it's your FICO score that most lenders look at, Experian's rental reporting won't have much of an impact for obtaining a mortgage. But there's no telling how lenders will come to read this information in the future. FICO's Careen Foster says that FICO is "constantly evaluating new sources and types of data... [and} looking forward to receiving and analyzing Experian's new rental data to determine how it might enhance the picture rendered by the FICO score." So if you're looking to purchase a home someday at a good rate, being aware of your reported rental payment history might prove to be important.
In this ever-changing credit landscape, please reach out and ask me questions, JeanneKelly@Kgroupconsulting.com