How To Report Rent Payments To The Credit Bureau: Landlord Tips

As a landlord, you will often rely on information gathered up and reported in a tenant’s credit history. Do they have a history of managing their financial system appropriately? Were they ever evicted from a property in the past?

This type of information becomes a part of the credit report that every potential tenant out there has. Did you know that your experiences with tenants who rent your property can and should help to create their credit as well?

When a tenant pays their rent on time every month, they’re showing financial responsibility that they should be praised for. Often, however, these payments never make any impact on their credit score because they aren’t reported to the credit bureau. Together, you and your tenant can change that.

On the flip side, some tenants consistently pay late rent, and this could be reported, too. When you report good and bad rental behavior, you’re helping make a tenant’s credit more indicative of who they really are.

But do you know how to report rent payments to the credit bureau?

Many landlords do not have rental payment reporting set up, but it isn’t hard to do and can make a big difference in the way you interact with tenants moving forward.

A Table of Contents: How to Report to Credit Bureaus as a Landlord

• Setting Up Your Reporting Profile
• The Positive: Reporting On-Time Payments
• The Negative: Reporting Late Payments

Setting Up Your Reporting Profile

So, what do you do when you want to learn how to report rent payments to the credit bureau?

Many landlords are not aware that they can report rental payment information (good or bad) to credit bureaus even if they aren’t dealing with an eviction situation. The payment history between you and your tenants is part of their credit history, and for that reason it can help to improve the accuracy of the tenant’s credit score.

There are a number of different websites out there that you can use to report information to the credit bureaus. Each site reports to one or more credit bureau. For example, rent history can be reported to Experian. Typically, you must make a profile before your tenants can have their payments reported. Once you have a profile, the tenant can register to self-report or you can report for your properties.

Every site is set up a bit differently, so the best way to find out how to set up your profile is to visit one of these sites and explore it yourself.

Relevant Credit Bureaus

It is worth mentioning at this point that not every credit benchmark includes information that is reported about rental payments.

The most commonly used version of FICO does not include rental payments in the credit score calculation.

Other scores, such as FICO 9, FICO XD, and Vantage Point, however, do. Regardless of whether or not the information ends up being used in the final credit score, the following credit bureaus include any reported rental payment information in the full credit report:

• Experian
• Equifax
• TransUnion

When rental payments are put on the credit report, they are usually listed as a type of tradeline, much like a car loan or mortgage would be.

At this time, less than 1% of credit reports have any sort of rental information on them. With a huge population of renters, this is largely because rental information is not frequently reported to the credit bureaus.

Who Should Pay? Opt-in or Out

Depending on which service that you decide to use as a landlord, there will likely be some sort of fees involved. Some services have an annual fee that landlords must pay to be registered on the service. Others also have a monthly fee for the actual reporting every month.

The fee structure varies a lot from service to service, so it can benefit you to look around before you lock into one reporting service. Depending on what your goals are when it comes to reporting rent payments, one might stand out more than others.

You can pay that cost to do the reporting or the tenant can pay for it. Landlords usually decide who should pay for it depending on who wants the reporting to be done.

One way to decide who should pay is to introduce the possibility of credit reporting to your tenants. If they want to opt-in, they can pay or split the cost with you. If they opt-out and you still want to report payments, any associated fees will be yours to cover.

How To Report Tenant Payments To The Credit Bureau Directly

While many landlords would prefer to avoid the cost of rental payment reporting by reporting it directly, this is not possible at this time.

You must use a third-party reporting site to get this information to the appropriate parties. For now, you’ll have to stick with this system!

Landlord Tip: Search for local collection agencies or attorneys that specialize in debt collection. Be sure to ask specifically if they report to the credit bureaus. Most agencies and attorneys work on a contingency basis meaning they get paid if they collect on the debt. This means there should be no out of pocket expenses for the landlord.

The Positive: Reporting On-Time Payments

When you regularly report rental payments to the credit bureau, most of these payments will be standard, on-time payments. When the credit bureaus receive this information, it shows that a positive tradeline is active on the account.

If credit reporting is something that you are thinking about doing, it’s important to learn about the benefits for yourself and for your tenants. With this information, you can build stronger relationships with all of your tenants.

Benefits for Renters

Why would renters want their rental payments to show up on their credit report?

First, they might find this to be very beneficial if they plan to rent again in the future. Most good landlords run full credit reports, and they will see that the tenant has a history of keeping up with their rental payments.

Second, having a regular rental payment on their credit account can actually help to improve their credit score in the right situation. Rental payments appear as a type of tradeline in credit reports and having a higher percentage of available credit show up on the report in this way can improve their credit score.

Benefits for Landlords

One of the best things about reporting payments regularly (even if they are on time) is that it creates accountability between you and the tenant.

The benefits when it comes to reporting on-time payments to credit bureaus largely favor the tenant, so showing that you are willing to do this can create a lot of positive energy in your relationship. And yes tenants, this can help build your credit! Helping them build up their rental karma will build up good karma between you both, too!

Another benefit for landlords, however, is that more landlords reporting rental payments can help landlords everywhere find better tenants. It can be hard to find a great tenant, and a credit report doesn’t usually include rental history since it is not frequently reported. Tenants with a positive rental history are worth the risk, and a rental history credit report can help to show this information.

The Negative: Reporting Late Payments

If you do rental payment reporting and a tenant pays late or doesn’t pay at all, this information will make it onto their credit report in various ways. You might get upset that a tenant keeps paying late and want to report a tenant to the credit bureau.

Most tenants will not want this to happen, so the knowledge that you report to credit bureaus monthly can help to keep tenants focused on making their payments on time. You may want to remind tenants that consistently paying late in the ways of this can affect them.

Even if late payments may not actually lower their credit score, every late payment issue will show up in the full report. If they plan to rent again in the future, this could be a problem for them. Ensuring that they know this can help encourage tenants to be more reliable while also protecting you and their future landlords.

What Happens Once Reported?

Once late rental payments are reported, they are considered to be late payments as anything else in a credit report is. That late payment will show up within credit reports and can appropriately affect the overall credit score of the tenant.

Additionally, late payments will affect the ratio of available to used credit until it is paid up. When this percentage is out of balance, it will negatively affect a tenant’s credit score.

Conclusion

It’s not your responsibility to report rental payments and other financial situations that occur between you and your tenants to the credit bureau, but doing so can be beneficial for both you and your tenants.

This is all that you need to do:

• Sign up on a reporting website
• Report payments every month
• Report late payments with the proper information when necessary

Once you set yourself up to easily report rental payments to the credit bureau, tenants can easily opt into the system and improve their future credit situation. You get the joy of helping them on this journey, and it will do a lot to improve your tenant-landlord relationship along the way.