COSTA MESA, CA - Renters who have for years faithfully made payments to their apartment landlords can finally now get credit for their responsible payment history. Credit giant Experian has announced that it will be the first major credit reporting agency to include rental payment history in its credit reports. It's not going to help your FICO score yet, but it could help you get another apartment and maybe even buy that first home.
According to the National Multi-Housing Council, there are nearly 96 million individuals currently renting who are not getting the "credit" they deserve based on their credit reports with as many as 50 million of them living in multifamily properties.
In the past, on-time rental payments did nothing to boost a credit score. Only negative rental activity made it on reports, not positive. But now Experian will be able to incorporate positive rental data into a traditional credit file.
Rental data is sent to Experian through its RentBureau Division into the traditional credit file. 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 who primarily service apartment complexes.
"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," said Brannan Johnston, vice president and managing director, Experian RentBureau. "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."
Although the information will be available on your credit report, it will not affect your FICO score…unless it's negative. FICO spokesman Craig Watts says whether the information will be incorporated in the widely used FICO score is yet to be determined. Once Experian shares this rental payment data, FICO scientists will evaluate whether the information can predict credit risk and should be added to the scoring model, he says.
However, positive rental payment data can help you qualify for other credit products, like purchasing a home. Lenders can now update their underwriting procedures to automatically capture a consumer's rental payment obligations from their credit report, giving them a more timely and comprehensive understanding of a consumer's monthly obligations and payment history.
"For more than 20 years Experian has been a strong supporter of comprehensive data reporting for the benefit of lenders and consumers," said Steven Wagner, president of Experian Consumer Information Services. "Including rental payment data in the credit file is a groundbreaking win for consumers and our vision of full-file reporting. Many consumers feel that building credit is an uphill battle, but this approach gives renters credit for managing the payments for the place they call home."
So if you're looking around for a new apartment, ask them if they use Experian's RentBureau software and get credit for your responsible payment history.