Paying rent is undeniably the biggest strain on our paychecks above all other expenses.

As of this year, over 11 million Americans spend over half of their income on rent, according to the annual State of the Nation’s Housing Report from the Joint Center for Housing Studies of Harvard University.

Another record high of over 20 million Americans spend more than 30% of their paychecks on rent each month.

With the crazy amount we spend on rent each month, it may come as a surprise that up until 2010, paying your rent on time had absolutely zero effect on your credit score.

Even if each month for years you paid on time, it didn’t impact your future financial health whatsoever.

That all changed in 2010 when Experian (a major credit bureau) acquired RentBureau, a major credit reporting agency focusing on rent payment history.

Due to this partnership, rent payment information can now be downloaded directly by landlords or property managers, then reported by credit reports through Experian.

How to use Rent Payment Reporting to your Advantage
This combination can be both an advantage and a disadvantage.

If you don’t pay your rent on time, your credit score can go down, making it more difficult to acquire a loan or mortgage in the future.

However, if you maintain a good history of paying rent on time, it can give a serious boost to your credit history, giving you an advantage out of something you were hopefully already doing anyways.

Considering that a high proportion of Americans have low credit scores (below 600), it is important for people to try to increase their credit scores when there is a simple route to doing so.

The Logistics of Rent Reporting

RentBureau receives payment data every day.

Both online rent payment management services, as well as companies who manage properties, send this information to the RentBureau every 24 hours.

After this data is collected, your rent payment history appears on your credit report from Experian.

These types of credit reports are used by a wide variety of different industries and economic sectors.

Banks and other financing companies utilize these reports in order to decide whether or not you will be eligible for various loans including mortgages.

These reports also impact your ability to open a new credit account or receive an increase in your credit limit.

Additionally, this also helps your likelihood of securing an apartment you hope to rent.

Landlords screen these reports and are more likely to choose prospective tenants with a positive rent payment history.

How to Make sure your on-time payments are actually reported

 While some landlords automatically report rent payments, others do not, or require tenants to opt in.

One collaborator, Rentler Payments, partnered with RentBureau so that tenants can opt in when signing up for their system.

Using sites such as these help you build your credit history automatically when paying your rent.

They also help you to pay online using methods such as credit cards or other online currency.

Another great way of building your credit history through rent payment is to always pay your rent using a credit card.

Then, pay it back immediately each month in full with the cash you would have used.

This helps build your credit score.

This method is a double whammy- you build your score using on-time payment reporting, and you also get the additional boost from paying off your credit card on time.

Paying rent on time, and making sure it gets reported to the appropriate credit data agencies, makes sure you set yourself up for financial success in the future.

It will make your life easier, facilitating you to rent apartments easier by being chosen by landlords, and help you get a great rate on future mortgages, should you decide to buy a house.

Other ways to build your credit history