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How Paying Rent On Time Helps Build Your Credit History



Credit plays an important role in your life, it affects more than just your credit score and depending on what you have already established it can determine the likelihood of what home you can qualify for. Young people often have limited experience with credit and might not realize all the ways that good credit can make life easier.


Your rental payment information will be included as part of your standard credit report and may be incorporated into certain credit scores. The inclusion of positive rental payment history within Experian credit reports allows you to establish or build credit history through timely rental payments.


Related Article: A Guide to Establishing Credit for the First Time


" In the long run, having a two-year excellent credit line for my rental payments will add value by helping me to potentially receive lower interest rates on a mortgage and car and consumer loans. I may even get a better rate on insurance premiums. ”

— B. Scott, Multifamily resident



Factors That Affect Your Credit Score


The information that impacts a credit score varies depending on the scoring model being used. Credit scores are generally affected by elements in your credit report, such as:

• Payment history for loans and credit cards, including the number and severity of late payments

• Credit utilization rate

• Type, number and age of credit accounts

• Total debt

• Public records such as a bankruptcy

• How many new credit accounts you've recently opened

• Number of inquiries for your credit report



How to Improve Your Credit Score


If you reviewed your credit information and discovered that your credit scores aren't quite where you thought they'd be, you're not alone. Since your credit scores use information drawn from your credit report, your credit activity provides a continually-updated basis of data about how responsible you are with the credit you're currently using.



Credit Scores Do Not Consider the Following Information:


• Your race, color, religion, national origin, sex or marital status (U. S. law prohibits credit scoring formulas from considering these facts, any receipt of public assistance or the exercise of any consumer right under the Consumer Credit Protection Act.) • Your age

• Your salary, occupation, title, employer, date employed or employment history (However, lenders may consider this information in making their overall approval decisions.) • Where you live • Certain types of inquiries (requests for your credit report). The score does not count "consumer disclosure inquiry," which is a request you have made for your own credit report in order to check it. It also does not count "promotional inquiry" requests made by lenders in order to make a "pre-approved" credit offer or "account review inquiry" requests made by lenders to review your account with them. Inquiries for employment purposes are also not counted.




Resources:


(1) Experian, "What is a good credit score?"

https://www.experian.com/blogs/ask-experian/credit-education/score-basics/what-is-a-good-credit-score/


(2) Experian, "A Guide to Establishing Credit for the First Time"

https://www.experian.com/blogs/ask-experian/how-to-establish-credit-as-a-young-person/


(3) Experian, "Build Credit History By Paying Your Rent On Time"

https://www.experian.com/rentbureau/rental-payment.html

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