Did you realize that in 2011 Experian, one of the three leading credit-reporting companies, added a section to millions of credit reports showing one-time rent payments, and raised the credit scores of many people? The company said that this in 2012 it would add in negative marks, including mentions of bounced checks or of tenants’ leaving before a lease was up.
Now two other companies, CoreLogic and FICO, are planning a new credit report and score that incorporates payment histories from landlords, as well as payday and other nontraditional loans, child support and, later on perhaps, utility and mobile phone bills.
Incorporating rental payments into credit scores could affect millions of people who have not established credit histories through credit cards, student loan repayments and other credit sources. That includes recent college graduates, students and some divorced people. “The biggest impact is on individuals who were not previously scoreable,” said Brannan Johnston, the managing director of Experian’s rent bureau.
Experian has mostly major property managers and apartment companies reporting rent histories, via their accounting software. Most small landlords are not, though Experian is considering a system that could allow more independents to report on-time and problem renters.
So, if you are thinking of buying this year it is something to keep in mind. Especially if you are trying to build your credit scores before you make the big move. The lower the credit scores, the less you qualify for and the higher the interest rates may be.