1. Your rental history is now included in your credit reports
For decades, the only housing payments that were tracked by credit bureaus were mortgage payments. Lenders would report whether you paid your mortgage on time and that payment history would be used to help calculate your overall credit score. Now "nontraditional" payments such as monthly rent are also being factored in.
The credit reporting giant Experian even has a unit called Experian RentBureau. It keeps tabs on how well renters are handling their housing obligations. And Experian includes residential rental payment information and rental history on its credit reports — a change that could impact millions of renters nationwide.
So the lesson here is: Pay the rent on time.
Experian took steps to add rent payments to your credit report but FICO still ignores them because they aren't credit related.
I have never reported rental payments for my tenants good or bad, and I probably never will.
I will give them all the copies of any rent paid from the time they moved in until the time the move out if needed, and will also supply any needed documentation for them to purchase their own homes if rent related or need landlord confirmations.
Am I the only one who thinks reporting rental payments could be a good thing. Many people don't own homes but do pay rent and it seems like this could be another positive vehicle for establishing a positive credit history. Granted it can be a negative vehicle if you pay your rent late but thats no different then paying a mortgage late or credit cards late.
It really isnt about if its a good idea or bad idea in my case.
I look at it from a business view. If I report the rental payments guess what it cost me. If I report to more then one credit reporting bureau, it cost me for each and every bureau. So should I add this cost to the tenant in their rent payment?
I am a great landlord in my opinion and my tenants opinions. There is nothing that isnt fixed or upgraded on a regular maintenance plan in any of the homes we own. If by chance something breaks or needs repairs it is taken care of with-in 24 hours 99% of time. The slim chance it isnt, is more of out of our control, but if it is something that puts the tenant in an uncomfortable state such as a bad heating unit and house is to cold, we will put the family up in a hotel until repairs are made or unit is replaced. We have also paid tenants money for the inconvenience, for additional expenses such as eating out, additional fuel, as examples.
Now the biggest issue I would have with reporting payments is we are softies. We wouldnt want to report late payments. We wouldnt want to hurt any of our tenants chances to obtain mortgages, or purchase a new car. If I start reporting Im obligated to be truthfull and follow the rules.
Well as of now we actually have no rules with our tenants. We dont charge late payment charges, we dont hold anyone into a lease or require any type of notice, we dont even chase you down for being several months behind. But on the good side of things, we actually have great tenants also. No one takes advantage of anything, the rent is paid in time with a few days here or there, and they have never made any major changes to anything.
Its a win win situation for ourselves and our tenants, to keep a great relationship, and if I started reporting things to the credit bureaus, that relationship may fall apart for not so happy endings.
I understand all of your points and they are valid points but do you also understand my point. Many people do not have mortgages which is obviously a good source of credit history for better or for worse. Many people who don't have mortgages do in fact pay rent and pay it on time and are good tenants. Should they not have that good rental history as an avenue to build a strong credit history and improve their score. It would seem to me that a solid record of on time payments of rent is more proof of credit worthiness then even paying low credit card limits on time.
I don't know that I agree with you. I see what you are getting at, though. It just seems like mortage payments are considered special in a way that rent payments shouldn't be. The vetting process that banks put you through, for example, would be ridiculous for most any rental situation.
I know some people with $800/month mortgages and other people who pay $2500/month for rent. If they both pay on time consistently, is the one with the smaller mortgage payment more credit worthy? On the other hand, if they both are chronic late payers, aren't they both bad credit risks?