Nearly half of all Americans have low or no credit scores, which makes it hard for them to get loans, housing, and other financial opportunities. This makes it harder for them to build wealth.
But many people don’t know that sending a record of their monthly rent payments to a credit bureau, which is called “rent reporting,” is an easy way to start or build credit.
What renters should know about credit scores
In a perfect world, people would pay back their loans in full every month, never go over their credit limit, and pay on time. However, this isn’t always achievable. Everyone’s life is different, and some groups have to go through more difficulties to be an “ideal borrower”.
One of the more common hurdles to having a great credit score is having to pay rent.
For renters, rent is usually their biggest monthly expense, taking up anywhere from 30% to 50% of their total income. In the past, however, paying rent didn’t affect credit scores because it’s not really a debt paid. This large payment is made every month, but banks, credit card companies, and credit bureaus don’t see it. Because of this, about 26 million Americans today are “credit invisible,” which means they don’t have a credit history and can’t prove creditworthiness.
Since both lenders and landlords want to rent to people with good credit, working to improve your credit score can help you get access to more financial opportunities. Rent reporting can help you make a good financial impression if you are renting and want to improve your credit score.
How rent reporting works
Rent reporting is the process of reporting verified rent payments to credit bureaus to build your credit history and increase credit scores.
Because rent payments aren’t automatically reported and tenants cannot report rent payments themselves, you would need a third-party service to do it for you. When rent payment information is given, these services keep track of it and send it to credit bureaus.
One of the best rent reporting services that can help you report your current and previous rental history is Boom Pay.
Boom has several features that make it the best rent reporting service. These features include:
- Reporting to all three major credit bureaus (Equifax, Experian, and TransUnion)
- Fast and easy signup process
- No landlord involvement
- Add your past payments
- Mobile app
- Secure transactions through Plaid
Boom Report works by reporting your rental history to the three major credit bureaus. This will help improve your credit score over time, which can be especially important if you’re trying to buy a house or car.