Tenants who always pay their rent on time deserve a boost to their credit score, right?
Unfortunately, this doesn’t happen on its own. Although rent makes up a large portion of most tenants’ monthly expenses, only credit-related payments are automatically reported and included in credit score calculations. But this does not include rent.
Rent reporting services enable tenants to send information about their rental payments to the agencies that calculate credit scores and get the points they deserve. Depending on the reporting service they choose, a tenant may or may not need their landlord’s cooperation to verify their payments.
But, while the benefits to tenants of reporting rent payments are clear, what’s in it for landlords?
There are, in fact, advantages for landlords too, including increasing the likelihood of their tenants paying on time.
With that in mind, we’ll look at all the benefits for landlords of enabling and encouraging tenants to report their rent payments. We’ll also share our list of the best rent reporting services, some of which landlords can use to report rent payments for all their tenants, while others are services they can recommend to tenants to use themselves.
Table Of Contents: Rent Reporting Services
Making rent payments part of credit score calculations significantly benefits the entire industry. Learn more in our guide.
- Benefits Of Rent Reporting Services For Landlords
- Finding The Best Rent Reporting Service
- Boom Pay
- FAQs Rent Reporting For Landlords
- Start Rent Reporting For Your Tenants
Making regular, on-time payments is an essential component of credit scores, forming 35-40 percent of the score, depending on the agency. Credit-related payments such as mortgages, loans, and credit cards are all automatically tracked by most credit agencies.
However, rental payments, monthly utility bills, and other subscription contracts are not tracked automatically. This can make building a good credit rating challenging for some renters.
So, renters have clear benefits in working with a service that will report their rental and similar payments to credit agencies. This will increase their score and give them a better chance of taking out a future loan or credit card.
Services operate by identifying rent and other regular payments through payment systems such as SWIFT, credit card accounts, money orders, checks, Venmo, cash apps, and more. Once these payments have been identified and verified, they can reported monthly to credit agencies.
But why should landlords care whether their tenants report their rent payments?
First and foremost, landlords screen tenants specifically to ensure they can afford to make the proposed rental payments and that they typically pay their bills on time. If someone’s previous rental payments are not reported to credit agencies, landlords won’t receive the complete picture when they check tenants using standard screening approaches.
Therefore, you might find yourself turning away good tenants due to a lack of information or potentially approving tenants who may always make their credit card payments because they are building their credit but are often late with the rent.
Overall, landlords have a lot to gain from the rental industry more closely aligning with approaches to credit rating. This begins with encouraging and enabling your own tenants to report their rent payments.
When you put rent reporting in place, there are other benefits you can expect as a landlord.
- Get rent payments on time: When tenants know their rent payments are being tracked and late payments will negatively impact their credit rating, they are more likely to pay on time.
- Attract tenants: Offering rent reporting as a service within your lease agreement is an extra that may help you set your property apart from competition in the area. You might also attract more quality tenants who prioritize their financial obligations.
- Recover missed payments: If you have a tenant who decides to move out without paying what they owe, rent reporting can make it easier to hold them accountable as they are less likely to be able to find another place to rent with this black mark on their credit history.
- Get better tenant screening: The more information available on a potential tenant’s financial history, the better you’ll be able to judge whether they will be an appropriate tenant for your property.
There’s no question that financially reliable tenants and their landlords benefit from reporting rent to credit agencies.
To report rent payments, you need to work with an intermediary that gathers your data and sends it to some or all of the big credit agencies. These services sometimes work with a landlord or property management company to report rental payments for all of their tenants.
More often, though, it’s the tenant who needs to join the rent reporting service. In doing so, they may also be able to report other regular payments, such as utilities. It’s up to the reporting service whether they need landlords to verify tenant rental payments.
There are a few main features to look for when choosing the best rent reporting service for you. Consider the following:
- Do you want the reporting service that works with landlords to report for all your tenants, or do you want to know about personal services you can recommend to your tenants?
- Which credit agencies do the service report to? Ideally, you want services that report to all three major credit bureaus, including Experian, Equifax, and TransUnion.
- How much is the service? Is this an affordable service with a low monthly fee, or will it be an unnecessary financial burden?
- Does it allow for other kinds of reporting? While landlords will principally be interested in rent reporting, tenants may want to report other regular payments, such as utility bills and subscriptions.
With these factors in mind, what are the best rent reporting services for landlords?
Boom Pay is one of the most affordable rent reporting options on the market, with services for both property managers and tenants. It reports to all three credit agencies: Experian, Equifax, and TransUnion.
Property managers can report rent payments in real time by integrating Boom with their property management software. You can also confirm payments every month by sending a CSV file.
Landlords pay just $2 monthly for each rental they want to report on. They can also register up to 24 months’ worth of previous payments.
Boom Pay also offers services directly for tenants, who can pay a signup fee of $10 and then a monthly fee of $2, plus a $25 one-off fee to report up to 24 months of previous payments. Tenants can use the service not just for rent but also for utility bills and subscriptions.
LevelCredit is another service that can be provided either by landlords for tenants or that tenants can sign up for independently to improve their credit. It reports rent payments to all three of the big credit agencies.
LevelCredit offers tiered pricing for landlords depending on how many properties they track and what features they need. Their RentTrack product is designed especially for landlords. It includes reporting tools that are compliant with new laws in California that require all affordable property managers to offer rent reporting.
While landlord prices aren’t publically available, LevelCredit is at the cheaper end of the spectrum for tenant prices. Individual tenants pay no signup fee, just $6.95 per month with a $49.95 one-time payment if they want to report retroactively for the last 24 months. Tenants can also report utility and phone payments to Equifax but not the other agencies.
PayYourRent is a rent reporting tool specifically for landlords and offers a range of other tools too, including processing rent payments, managing maintenance requests, receiving online applications for prospective tenants, tenant screening, and communications systems for managing contact with tenants.
Looking specifically at rent reporting, PayYourRent reports to all three of the main credit agencies and can be integrated with compatible property management systems.
Plan pricing depends on how many properties you want to report on. It’s $9.95 per month for up to five units and $19.95 per month for up to 50 units, and there are also plans designed for larger companies.
Below are answers to some of the questions most frequently asked by landlords about rent reporting services.
If you do not offer rent reporting to your tenants, but they want to sign up for a rent reporting service themselves, they may or may not require your cooperation to confirm their rent payments. Most services work by identifying the rent transaction as it appears on online payment systems and then flagging it up each month to confirm.
If a tenant asks you to help them get set up with a reporting service, you can expect it to take you less than 15 minutes and have no monetary cost. For example, Boom Pay does not require landlords to verify tenant rent payments, but LeaveCredit does.
When credit agencies receive information about rental payments, it’s considered a regular payment against debt, like a mortgage. Therefore, making regular rental payments on time boosts the tenant’s credit score in the same way that making regular mortgage payments does.
However, rental payments do not affect credit scores as much as mortgage payments because there is no associated “amount owed” for the overall debt.
For anyone struggling to build their credit score, perhaps because they aren’t making any loan or credit card payments, rent reporting is one of the best ways to boost their credit rating. All they’re doing is taking advantage of payments made anyway by sharing them with credit agencies.
It’s also worth it for landlords to invest in rent reporting for their tenants. This encourages tenants to pay rent on time and can attract more tenants, not to mention the kind of tenants who care about their financial reputation.
Rent reporting also benefits the rental industry as a whole, as more information is available for all landlords when screening tenants.
It’s worth noting that in California, it is already a legal requirement that managers of affordable properties offer rent reporting. It’s probably only a matter of time before this requirement expands and rent reporting becomes mandatory in other states.
Rent reporting that sends records of rent payments to credit agencies is becoming increasingly common as renters try to build their credit scores. Landlords are already legally required to provide rent reporting in some parts of the country, which is a requirement that is likely to expand.
Offering rent reporting can be a benefit for landlords. It encourages tenants to make timely payments since they know it will positively impact their credit rating. It can also be an appealing feature that attracts financially responsible tenants to your property.
Encouraging and enabling rent reporting also supports the rental industry as a whole, as it improves the quality of information available about renters when conducting tenant screening.
Learn more about RentPrep’s tenant screening and rental background check services here.