You're probably well aware that paying your credit card bills on time is one of the best things you can do to help your credit score. Lenders will want to see that you're responsible, and maintaining a positive payment history will reflect that. You may think on-time payments only pertain to your bills, but giving your rent check to your landlord before its due date can also affect your credit score. Whether you have been a renter for a number of years or are just starting to look for your own place, you should understand that rent payments can have an impact on your credit score.
How do payments affect my score?
In some instances, a landlord won't report your rent history to the credit agencies. But there are many that value this resource, as a credit report can be a useful tool to inspect tenants' financial responsibility. Rental payment history can show up on Experian and TransUnion reports, but your landlord must report the data to them. Sending in your check even a few days before the due date can help you maintain your positive history and increase your score at the same time.
Can a landlord check my credit?
Every landlord uses different criteria to evaluate a potential tenant. You may be asked to provide verification of employment and references. Keep in mind that landlords can only look at your credit report if you give them permission.
Where does this information show up?
When your rental history is being accounted for, it will show up on your report like an auto loan if you have a lease with a contractual obligation. If you pay month to month, this will be reflected on your report like a charge card or a tab. One of the widely used scores, VantageScore, is starting to incorporate rental history into its model, and the information could show up on other scores as well.
Paying your rent on time can help you in the future if you're thinking about purchasing a condo or applying for a mortgage, because condo associations and lenders will see that you were a dependable tenant.
How bad can lateness affect my score?
Much like bankruptcy or collections, bad rental history can stay on your credit report for a number of years. Evictions can be harmful to your score, so if this situation has occurred, make plans to pay off the debt and see if you can get it off your report.