Very soon a good rental payment history will help you improve your credit score. Experian recently announced it is now incorporating positive rental data from its RentBureau Division into the traditional credit file, opening a new avenue for the estimated 50 million underbanked consumers—which can include everyone from college students and recent graduates to immigrants—to build credit with continuous on-time rental payments.
Brannan Johnston, vice president and managing director, Experian RentBureau said:
“Given that one-third of the U.S. population rents, we felt it was imperative to reflect the true creditworthiness of those individuals who responsibly pay their rent. Our research shows that over one in three consumers in the highest risk VantageScore score band will improve to at least the next score band with the addition of positive rental data from RentBureau. We are thrilled to be industry leaders in this initiative, and look forward to providing this credit-building avenue to residents.”
In the past, good rental payment history wasn’t factored into boosting a credit score. Positive rental history will now also help many renters who are looking for ways to rebuild their credit scores due to financial hardships such as a foreclosure or a bankruptcy. Hopefully, this would help them qualify sooner for new loans like auto, credit card and home. Also, the lenders now can capture a consumer’s rental payment obligations directly from the credit report and eliminate the need for time consuming verification of Rent. Additionally, lenders will now have a comprehensive understanding of a consumer’s total monthly obligations to assist with offering credit to emerging consumers.
Experian acquired RentBureau’s multifamily division in June 2010. RentBureau is the largest and most widely used credit bureau for the multifamily industry. RentBureau’s database receives rental payment histories every 24 hours from its national network of property management companies, which currently includes more than eight million residents nationwide. Members of this network contribute their rental data to RentBureau directly and automatically from their property management software. In return, members receive immediate, centrally stored, integrated verification of new rental applicants’ payment history as part of their existing resident screening services.
Once implemented, this rule will definitely help college students, recent immigrants, and renters looking to rebuild their credits. Also, I am hoping that the other 2 credit bureaus i.e. TransUnion and Equifax will implement something similar into their credit scoring models.
Amazon.com Best-selling author, Shashank Shekhar (NMLS 8176) is a mortgage lender with Arcus Lending, offering loans for home purchase and refinance. Shashank has been featured as a mortgage expert on Yahoo! News, ABC, CBS, NBC and FOX. He has been named "Top 40 under 40" most influential mortgage professionals in the country.
