Reporting rent payments to credit bureaus — companies that gather and maintain individuals’ financial information and sell those reports to creditors and lenders — is a relatively new and powerful way for people who rent to quickly build their credit without incurring any debt. For those who want to establish or build a credit history or repair a damaged one, this is significant opportunity.
But did you know that all rent reporting services are not created equal?
There are several reasons for the differences, but the bottom line is: Because you don’t know which credit bureau a lender uses to assess creditworthiness, you must be sure your rent reporting service reports to all three of the top credit bureaus (Transunion, Experian and Equifax).
Here’s why reporting to just one or two of them isn’t enough:
Credit bureaus don’t share information.
You might think that even if lenders or other creditors don’t report information to a particular bureau, that agency can just connect with another credit bureau to grab the information. All three of the top agencies say on their websites (Transunion, Experian, Equifax) that they do not share information with any other entity, and that includes other credit bureaus.
Credit scores depend on the data on your credit report — and that data varies depending on the credit bureau.
Credit bureaus use scoring models to calculate your credit score, which is essentially a number that helps lenders predict risk. The top two models in use are the FICO Score, created in 1989 by Fair Isaac Corporation as the first general-purpose score, and VantageScore, created in 2006 by the top three credit bureaus and the independent company VantageScore Solutions as a FICO alternative.
However, because the data each credit bureau collects varies, there may be significant differences between agencies’ scores even if they are using the same scoring model. So, your score might look different when it’s calculated based on the information in your Transunion credit file versus the info on your Experian file.
Credit bureaus don’t necessarily have relationships with your lender.
Lenders tend to work with certain credit bureaus – and often only one or possibly two of the national agencies. Not only are lenders unlikely to tell you which credit bureau they’ll use to pull your credit report and scores, but also you can’t normally request that your lender work with a specific credit bureau. So, if your rent reporting service only shares your rent data with Transunion, but your bank only views your Equifax credit report, the data about your on-time rent payments may not factor into the lender’s decision at all. Reporting your rent to all three bureaus helps to make your credit score more consistent, so that there will be no disappointing surprises if a potential lender checks your score from only one bureau.
Being sure that your rent payments are included in your credit history with all three bureaus is a smart first step in positively influencing your scores. The next step is to ensure that each of the top three credit bureaus get your rent reported to them at the same time by a certified credit-reporting agency.
RentTrack was the first online rent reporting company to report to all three credit bureaus. Even today, we are still one of the only services that has the ability to report to all three.
We’ve focused on tri-bureau reporting for years because we believe that renters have the right to get the credit they deserve for paying on time month after month. Reporting to all three bureaus is the best way to make that a reality.
