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Rent payment It usually won’t affect your Credit – But they can in some cases. The consequences may be important.
Experts say rent won’t appear in your credit history, as landlords usually don’t report payments to the credit bureau like credit card issuers and other lenders do.
When rent payments do occur, it is usually because the tenant (the property manager representing the tenant or tenant) recruits what is called a rent reporting plan. These services are designed to provide tenants with the opportunity to grow their credit history through on-time rent.
“The good news is that there are a lot out there,” said Matt Schulz, chief credit analyst at Lendingtree. “In the past few years, this is certainly a space for growth.”
Experts say these services can also damage your credibility if you fall behind. Whether you report rent to the bureau, the debt collection effort of delayed or unfulfilled rent payments may also be a black mark of your credit.
The Consumer Financial Protection Bureau began accepting complaints about rent debt collection in August 2023. Since then, by February 21, according to CFPB data, there have been approximately 10,960 complaints about rent collection.
If you are a renter or a plan, this is what you should know.
Rent reports can help “credit is not visible”
Rent Report Especially to help thoseCredit is invisible“Or there is no credit history. If you are looking for ways to increase your credit, then such platforms can be a useful tool.
Those who enroll generally believe that credit scores will increase. When rent is included in the credit report, the average credit score of consumers increased by 60 points. according to Transunion report to 2021.
But if you are lagging behind rent payments, experts say the activity can also be reflected in such tools, and your score can be reflected.
More importantly, the rental reporting service is not always free and does not always report data to all three major credit bureaus, experts say. For example, the rental reporting platform rental Kharma Accusation After the initial setup fee is $8.95 per month. The service reports data to two of the three offices: Transunion and Equifax.
How rent is collected as debt
Even if you don’t use the rent reporting service, your landlord will be able to report to the credit bureau through the debt bureau’s delayed or unpaid rent.
She said that sometimes a rent crime occurs if a tenant leaves a unit and the landlord claims that the tenant owes rent or losses. The landlord in this case will then send the payment to the debt collector.
The number of added paid or unpaid collection transactions (accounts allegedly reported to appear in the consumer credit report) will reduce the score of 680 points by more than 40 points, with scores of more than 100 points, and more than 100 points, according to CFPB’s 2014 report, citing the FICO 8 scoring model.
But the impact of collecting trading lines will depend on variable factors such as your current score, score model, and even the latest results of the series, experts say. may be Less influence Once paid.
“If the debt collection commodity is already a few months old, it will be a few years ago. It’s very variable,” Wu said.
According to experts, here are some key factors to remember how your tenant records affect your credit history:
Rent Reporting Services
1. Do you actually need it? Wu recommends to see if you will really benefit from reporting rent. Experts point out that this is a more advantageous tool for those with weak credit records.
“It’s different for everyone,” said Adam Rust, director of financial services at the American Consumer Federation.
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“For some people, their credibility may already be good. So, it won’t make a big difference, and for others, especially those who don’t have credit history or thin documents, it can be very important.”
2. Does the service cost anything? Some rental reporting services are free, others require a monthly fee of $6.95 to $9.95. according to Go to the apartment list. The website found that some services charge a one-time registration or setup fee, which costs $25 to $95. See if it will pay extra or if your landlord covers anything.
3. Is the service reported to all three major offices? Schultz said the Confirm Rent Reporting Service reports your payment history to all three credit bureaus. Sometimes the service reports to one or both of the offices, but not all three, which can mean limited or unbalanced credit effects on yours.
“It’s something people don’t always think about,” he said.
4. What data does the service report? Experts say some people only share on time, paying rent in full to the credit bureau, while others may include deferred payments. Wu said even if they pay on time for eight consecutive months and the records are blank, future landlords and lenders may be able to connect these points.
She still remembers “life happened.” “Look at all this Federal Employees That’s unemployment Now. They don’t think they’ll be late for rent, either, and they have safe jobs. ”
Rent debt
The affected tenants may have reported information inaccurately to the credit bureau. From August to February 21, 2023, there were approximately 1,697 complaints about false statements or regarding collection of debts related to rent.
If you know of inaccurate or incorrect information in your credit report, you have the right to object to this information Fair Credit Reporting LawWu said it is a law that manages credit reports, tenant screening reports and background checks.
“You have the right to raise objections,” she said. But remember that it has been difficult to question the report errors involving debt collectors in history. Creditors usually take the side of the debt collector.
“It’s like a judge always defending the defendant or referee, always calling on the home team,” she said.
Wu said that even if you decide to eventually pay for the collection items in your credit report, except for medical debt, it won’t go away immediately.
Under the Fair Credit Reporting Act, adverse information such as debt collection may remain in your credit report Seven years.
In 2022, three credit bureaus Announce Wu said voluntary changes were made to remove some medical debts from the credit report, including paying off medical debts and outstanding debts below $500.
Besides that, even if you pay, the item remains “jingle” even in the credit report.
“So it can also solve the problem,” she said. One thing you can do is “pay” or pay the debt collector to get the collection line out of your credit, she said. Wu said if you decide to go through this route, make sure to get the agreement in writing. You may need to consult a legal expert on this idea.
Similar to the landlord – If you are going to end your lease early and you are getting the landlord’s “Confirmation”, get an agreement and any details about your outstanding balance or written obligations.
