Rental History to Be Included in Credit Reports
Credit bureau Experian announced last week that positive rental history will be included on credit reports going forward.
The move should help underbanked consumers, such as college students and recent immigrants, build credit history.
In the past, only subsets of negative rental activity were included on credit reports, so consumers’ credit scores could only be hurt by their rental history.
The company said one-third of the country rents and argued that on-time rental payments should be included to reflect the “true creditworthiness” of those who pay on time each month.
Banks and lenders also stand to benefit from the change, as they’ll be able to update their underwriting procedures to automatically capture a consumer’s rental payment obligations from a credit report, instead of inputting it manually.
They’ll also have a more accurate understanding of a consumer’s total monthly obligations to assist in making future credit offerings.
Experian noted that the addition of positive rental history on credit reports will boost credit scores for more than one in three consumers in the highest risk VantageScore® score band to at least the next highest score band.
VantageScore uses both a number and letter grade (A, B, C, D or F), and has a credit score range of 501-990.
It’s unclear if the more popular Fico score will utilize positive rental history, but it’s fair to say it would make sense.
All the more reason to ensure you make your rent payments on time each month.
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