Renters with a good rental payment history could now be rewarded with better credit scores.
Last year Experian, one of the three leading credit-reporting companies, added a section to millions of credit reports showing on-time rent payments.
Now two other companies, CoreLogic and FICO, have announced new credit reports and scores for 2012 that will incorporate renters’ payment histories from landlords.
In addition to rental payment history, data on payday loan payments, other nontraditional loans and child support payments will also be reported. Utility payments and mobile phone bill information could be added later in 2012.
“Our research shows that one in three consumers in the highest risk score band will improve to at least the next higher score band with the addition of positive rental data,” states Brannan Johnston, vice president and managing director of Experian’s RentBureau.
For some borrowers, that could be a 100 point boost or more in their credit score, explains Johnston. But for renters exhibiting less than perfect credit behavior, their scores could take a hit.
Experian said that in 2012 it would add negative marks to renters’ files including notes about bounced checks and if they “bailed out” of their lease agreement by moving out before the end date of the lease.
Incorporating rental payments into credit scores could affect millions of people who have previously not been “scoreable.” That includes recent college graduates, students and divorced people.
100 million people. The three other major credit reporting companies, which include Equifax and TransUnion, have reports on 200 million.
TransUnion collects rental payment information and shares it with landlords, but Experian is the only one of the three so far to add rental history to credit reports.
Experian obtains rent history reports primarily from major property managers and apartment companies. Most small landlords are not reporting, but Experian is working on a system for them to send reports in the future.
If your landlord is not reporting to Experian or CoreLogic, says Maxine Sweet, Experian’s vice president for public education, you can build your rental history by documenting your own on-time rental payments.
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