A credit rating determines how creditors will look at you when you come to them for financial support. Anyone may need it sooner or later, and then you want your credit to be as good as possible. Maybe you want it now, as long as there is nothing burning that needs to be urgently addressed, maybe you think that somehow you will do it. However, the sooner you start building your credit, the sooner it will become good, and perhaps even excellent.
You do not want to take a loan without special need or to contact credit cards? It makes sense, but it is not even necessary to start improving your credit. If you pay rent for your home, then this may already be enough. “How paying rent can help to build credit?” You ask. You just need to learn about how to report your rental payments to the credit bureau.
Yes, and so it is possible, but unfortunately, not everyone knows about this, so apparently tens of millions of Americans do not have a credit history and then face draconian interest rates when they need financial help. It turns out that building or repairing an already affected loan can be completely painless when you know that your monthly payments can also bring you additional benefits.
Your landlord can be not only the person to whom you pay money every month, but also the person who will help you secure a prosperous financial future with a good or excellent credit. This is possible due to the timely paying you can help to build credit, as long as you have time.
Why should you start building good credit as early as possible?
Even if you do not plan major purchases, such as a house or a new car in the near future, this does not mean that you do not need a good credit yet. No one in the world is immune from all sorts of trouble and accidents.
When some unexpected unpleasant events occur, each person usually requires additional, often not small, expenses. Great, if you have a large savings account for extraordinary expenses. However, as statistics show, a large proportion of the US population lately do not have any savings at all and are not able to cope even with a problem that requires a thousand dollars to solve.
If you have at least good credit, then you will feel confident in almost any life situation. You will know that you will certainly be approved by almost any loan, quickly and without additional conditions on the part of the lender, and also you can count on the best interest rates on loans.
Moreover, many employers check the credit rating of job seekers. This is especially true of the work where you can deal with money or other material values. A credit rating is not only about your loans, it is generally about your future financial well-being.
Disadvantages of bad credit
As you understand, bad credit leads to the opposite situation with your financial life, opportunities and future. First of all, it will be harder for you to get approval for any type of loan.
Most lenders will refuse to finance you, despite the fact that you will need money. The same lenders who are considering lending to borrowers with a low credit rating will offer high interest rates and hard conditions. It may be necessary to secure a loan with your property, which is a risk for you.
In addition to loans, it will be harder for you to get the job you want, as well as renting an apartment or a house you want. Raising a credit to a good state one can be quite difficult and long in some cases, therefore, the earlier you deal with this issue, the more chances you have to attain the level of excellent credit as quickly as possible.
Pay the rent on time
The rent for your property is the necessary fee, which in any case you will pay to have a roof over your head. This happens every month, so if you learn how to report your payments to credit bureaus, then the rent will slowly but surely raise your credit score.
The main thing that you need to comply with in this case is the timeliness of making payments. When such large payments as rent come monthly on time, this is a sign for creditors about your reliability, stability and responsibility.
Despite the fact that rent is often perceived by many with money to the wind, but since paying rent can help to build credit, this means that this money can work for you as future credit. The rent will give you a positive credit history and in the future you will be able to count on your mortgage approval when you are thinking of purchasing your own home.
How to report rental payments to the credit bureau
Such possibility of rent affecting your credit rating and credit history are not known to many people, therefore very few of them use it. Let’s see how you can do this for your future well-being.
You can report your rental payments to credit bureaus, which will show this information later in your credit reports. Paying rent can help to build credit if you report this to TransUnion, Experian or Equifax. Your rental payments will be shown in the same way as other loan payments.
To report your rental payments, you will need the mediation of some companies that will do it for you. Consider some of the popular ones.
Rent Reporter cooperates with TransUnion and Equifax. The company can obtain information about your rental history from your landlord. Your credit score changes in 10 days.
Rental Karma is one of the cheapest services that changes your credit rating in 2 weeks. The big plus is that the company allows you to add up to 24 months past rental payments. This will help you quickly improve your credit and increase your credit history.
Rock the Score also allows you to accelerate the improvement of your credit by allowing you to add rental history reports up to 24 months. It is also possible to obtain information from your landlord.
PayYourRent can accept your rental payments and report each payment to three credit bureaus.
Rent Track offers a convenient way to pay for your rental online and reports to all three bureaus about your payments.
If you want to get the history of your rental payments over the long term to the bureau, you cannot do this without your landlord. Just agree with him about it.
Ask your landlord
Paying rent can help to build credit if you start reporting your rent to the credit bureau. Ask your landlord if he already reports your rental payments. If he does it, then specify in which bureau he informs, because credit bureaus do not exchange such information among themselves.
Also talk to your landlord about whether it is possible to pay the rent with a credit card. This method of paying rent will quickly raise your credit rating, just find out if you need to pay any additional fees. Depending on your credit card, this can be very profitable for you, thanks to large monthly payments.
Questions to ask
Before choosing the services of one of the companies that will report your rental payments to the credit bureaus, specify a few points to ensure that your data is secure.
Information about how these companies protect and use your personal data should be easily accessible and placed in a prominent place on their website. You should not contact companies that are trying to hide this information in order not to put your personal data at risk.
It is also worth checking out that the information about your rental payments goes to the credit bureaus, which the company indicated the intermediary. You can make sure of this by checking the changes in your credit score in the credit report of a specific credit bureau.
As always, when it comes to finance, carefully read the contract before signing it. Refine each item that you may not understand, check out all the fine print and all footnotes under asterisks so as not to miss any important conditions.
Naturally you need to be aware of what is happening with your credit rating. Check it regularly for errors and keep track of all credit score changes. If you find inaccuracies or errors in your credit report, then inform about it to the credit bureau. Write them a request to fix this error.
The credit bureau is obliged to check every such request. If not proved otherwise, they must eliminate the error. Also errors can be disputed, if you are sure that in this situation there is no fault of yours. You can also independently correct mistakes in the credit report on the website of each credit bureau.
Always check the data in your credit reports for accuracy and relevance. This is the key to your successful construction of a good credit.
Also monitor your payment information, if you want that paying rent can help to build credit for you. Maintain regular contact with the company that reports to credit bureaus, as well as with your landlord. Check all the information received from each of the parties and pay attention to any inaccuracies.
Having learned that paying rent can help to build credit, you can usenow these large payments to improve your prospects for a prosperous future. You will need to pay a little attention to this issue, but agree – the result it’s worth it.
Also, do not fully rely on only one way to build your good credit, because lenders appreciate the ability of the borrower to manage different obligations and different types of loans.
Reports on your rental payments are a good way to raise your credit rating. At the same time, other types of credit should be used to speed up the process. A gradual increase in the credit limit on your credit card will also have a positive effect on your credit, provided that you do not significantly increase the balance.
Quick repayment of loans, timely payments every time and a responsible attitude to all your obligations will allow you to quickly increase your credit score and make your credit good and then excellent. This will open up for you all available financial opportunities.
Rental payments that are inevitable can be beneficial to you. Expand your opportunities with other credit instruments. You can use our resource for this. Read our financial blog to find the best options for yourself and ensure your well-being.