No Credit for Rent

[Trish]

Can someone explain to me why rent isn't factored into our credit scores? Why it isn't required for a landlord to report it?  They require a credit check to be approved to rent from them - yet they don't reciprocate and report out rent.... I'm beyond frustrated.

Filed bankruptcy 2 years ago - since then have been making sure every thing is paid on time (minus 1 medical bill for $1000 that I am disputing the charges on)
My credit score is 560-569 depending on the which one you look at. And they all show the reason as bad payment history.

Now - if you took into consideration that I've paid $900 a month rent every month on time for the last 6 years - don't you think that would shoot my credit score up?
If I was paying that on any other account it would look absolutely amazing! Same thing with my car insurance, my phone bill, my electric, or any other every day thing.

I get hit with medical bills out of the blue and I make the decision to keep a roof over my families head and I'm punished with a ridiculous credit score -that after 2 years of trying to get it to come up won't budge one point...

I don't believe in credit cards - have no interest in being in debt for retail items or having to manage or juggle another account -  so please don't suggest I get one.
All I want is to qualify for a home loan.... nothing over the top. $120-140,000 will buy a  decent 3 bedroom house in not the worst or best part of town.
But I'm not seeing a light at the end of the tunnel and at the age of 36 - I have all but given up at the idea that someone somewhere might grasp the concept that my ability to pay out of the blue unexpected medical costs does not and has never affected my ability to pay for my housing or it's upkeep.

The system feels rigged and completely illogical.

[Anonymous]

Trish,

Your complaints have some validity to it.  But it isn't reality.  You feel paying rent on time is predictive of whether or not you will pay your mortgage.  I'm not sure there is any data to back you up, but intutively it sounds right.  On the other hand, there is ample data to show that the FICO score is predictive.

You have a choice play with the system as is or don't play with it and save the money to buy your house in cash.  No one is obligated to lend you money and as such you need to play by the rules set up by those whose money you would like to borrow.

[Trish]

I will agree no one is obligated to lend me money - but in the same breath - it is insane to be "judged" based on a scoring system the is top secret.

So I'd LOVE to play by the rules - if FICO would disclose their formulas I might have a snow ball fighting chance.

I'm not sure what rule I missed - I've paid every bill on time for 2 years and my credit score has not improved - and I'm still listed as poor payment history.

The ample data is a generalization and doesn't look at specific individuals.  My fico score almost prevented me from moving into the current place I live.
They turned me down because my credit score wasn't to their liking- after much convincing and making a deposit of 3 times the rent - they finally agree'd to allow me to move in.

Fast forward 6 years - and I'm the ONLY tenant they have that has never been late on rent. They even gave me a reduction in rent and a refund on a 2/3 of my deposit because of it.  Predictors are only as accurate and reliable as the people who are contributing to the outcome of those numbers.

Again - my point is .... No credit is being given for a good payment history despite credit being required to par take in a service.
This would be like you needing good credit to get a credit card - paying it each month - but them NOT reporting anything to ANY credit beurau and then being told - sorry you don't have a good payment history. There's no logic there.  You applied - got approved, made your payments.

I'm not suggesting I'm owed something - But I also don't deserve to be penalized because I can 't play by a set of rules that haven't been given to me.

How does a persons credit score NOT go up or down after making 24+ months of on time payments for every medical bill - every utility - every expense.
The bill that is in dispute is NOT listed on my credit report - so it shouldn't be a factor and the reason it's in dispute is because it was included in the bankruptcy 2 years ago and they are refusing to acknowledge it.

Pay my bills on time - Check. Don't over extend my credit (can't get any so that's a non-issue) Never owned a credit card - had no interest in them.

What are the rules to the game that I'm suppose to be playing?

[Anonymous]

FICO scores measure not whether you pay your bills on time.  It measures whether or not you are likely to make a payment late or default on a credit obligation.  Of course, your score won't go up as you have no credit obligations.  Paying a collection account does not count.  Neither does paying rent.  Those are not considered credit obligations.  While there are some moves to include those in FICO (ie FICO Expanded Scoring), the current system is built.

While you say the FICO score is secret (and it is), there are certainly well known facts about it.

Guess what, you need to obtain some credit obligations and show responsible use of them.  The easiest credit obligations to obtain are credit cards, which you didn't want to talk about.  If you are willing to listen and do your own research, I am sure I and the rest of the people on this board can help you get to a much better FICO score assuming you use your credit responsibly.

[Anonymous]

I'd be a lot more upset at the rental properties for requesting a credit check, than upset because timely rent payments aren't reported to the credit bureaus.

Then we'd have to start asking why my phone bill, cable bill, internet bill, car insurance, etc... etc... etc... aren't reporting as well.

I've simply elected to rent at places that didn't require them and so far, my experiences have been optimal.

I know it's not the answer you are seeking, but I'm just presenting an alternative view to it.

[Anonymous]

To put it simply a FICO score is a number rating your ability to pay back borrowed money (credit), borrowed money being the key word.

Since rent, you are pre paying, (paying the month's rent at the beginning of the month) so you are not being extended any credit, or having to pay back borrowed money since you are not borrowing, but paying in advance, so it doesn't factor into your credit score.

It is a good thing I think. I have had a perfect 5 year payment history on my rent and utilities but they don't show up on my credit report. My perfect payment history is reflected in my credit card and student loan payments.

[kjm79]

OP, I and many others feel your frustration.  There was a similar post yesterday about how the system is messed up and needs to be re-worked.  Unfortunately, NO ONE is required to report anything to the CRA's, not even CCC's.  However, I do feel that if a credit inquiry is required, that company should report the positive history or be barred from later reporting any negative history.  If I was making the rules, that's one of many that I would include.  Also, a paid collection should either be removed or given postiive scoring weight.  BUT I don't make the rules. 

And a HUGE misconception is that having a credit card means you have debt.  You only have debt if you use that card and can't pay it back.  You can use the card to buy a pack of gum and then pay it off.  That shows USE of credit.  It's already been said, FICO wants to see responsible USE of credit.  If you aren't using any credit then you can't show any responsible use and the only thing FICO has to go on is the past use, which isn't good.  I myself have gone the BK route and coming back from that was a PITA.  If you're against debt, what is financing a house going to do?  Put you in debt.  Pay cash.  Obviously lots of people don't have that option, I sure don't, so you have to use credit to get what you need.  Don't look at it as managing your debt, look at it as managing your credit.  Instead of the system working you, you work the system.  I use cc's that pay me rewards (that I apply to my payments) and I pay them not a penny in interest.  Another things is to make sure that you are looking at REAL scores, that's another issue altogether, but nontheless, REAL scores are what you need to pay attention to. 

[Tikon]

I'm reiterating some things that have been said, but:

1. Rent, phone bills ,electricity, etc. are NOT credit. They are service/rental bills. No one has extended you a line of credit, and therefore it would not be appropriate to report to a credit agency. As it was mentioned, you have no evidence that paying rent on time means you can handle credit. The credit agencies have mountains of evidence about who does and does not pay based on the information they have.

2. There is really no reason not to have a credit card. Once you build good credit, the rewards are worth the hassle. I'm fairly low income but I've netted ~$3,000 in rewards through my adult life. I've paid nothing in late fees or interest. $3,000 for playing the credit card game! And I've demonstrated an ability to handle credit that has allowed me to get a good mortgage and a 0% APR car loan.

[Anonymous]

As I understand it, mortgages don't actually affect your score either... some banks don't even report it.  (mine doesn't).

[webhopper]

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@Trish wrote:

I will agree no one is obligated to lend me money - but in the same breath - it is insane to be "judged" based on a scoring system the is top secret.

So I'd LOVE to play by the rules - if FICO would disclose their formulas I might have a snow ball fighting chance.

I'm not sure what rule I missed - I've paid every bill on time for 2 years and my credit score has not improved - and I'm still listed as poor payment history.

The ample data is a generalization and doesn't look at specific individuals.  My fico score almost prevented me from moving into the current place I live.
They turned me down because my credit score wasn't to their liking- after much convincing and making a deposit of 3 times the rent - they finally agree'd to allow me to move in.

Fast forward 6 years - and I'm the ONLY tenant they have that has never been late on rent. They even gave me a reduction in rent and a refund on a 2/3 of my deposit because of it.  Predictors are only as accurate and reliable as the people who are contributing to the outcome of those numbers.

Again - my point is .... No credit is being given for a good payment history despite credit being required to par take in a service.
This would be like you needing good credit to get a credit card - paying it each month - but them NOT reporting anything to ANY credit beurau and then being told - sorry you don't have a good payment history. There's no logic there.  You applied - got approved, made your payments.

I'm not suggesting I'm owed something - But I also don't deserve to be penalized because I can 't play by a set of rules that haven't been given to me.

How does a persons credit score NOT go up or down after making 24+ months of on time payments for every medical bill - every utility - every expense.
The bill that is in dispute is NOT listed on my credit report - so it shouldn't be a factor and the reason it's in dispute is because it was included in the bankruptcy 2 years ago and they are refusing to acknowledge it.

Pay my bills on time - Check. Don't over extend my credit (can't get any so that's a non-issue) Never owned a credit card - had no interest in them.

What are the rules to the game that I'm suppose to be playing?

---

There is a company called Churchill mortgage who will write loans for people with non-traditional credit, like utility bills, cell phone bills, rent.

Also, some companies are popping up now, EX has started to include rent as reported.  I signed one of my tenants up for this as she is credit challenged (due to medical issues when she was un insured), but always pays her rent on time. You may ask your landlord if they would consider doing this?  It cost me $49 and I used RentKharma