Buying A Home Smart Spending

Can You Build Credit With Your Monthly Rent?

Also note that some monthly rent credit reporting companies only report to one credit bureau. If you want to raise your credit score at all three, a credit card is more likely to do the trick.
Do a cost-benefit analysis to decide if it’s worthwhile
If you have terrible credit and want to buy a home in the next year or two, it could be worth $50 per month, or $600 per year, to get good marks on your credit. You would be paying to prove you are a responsible “borrower” in a way that improves your credit score and credit report over time.

But if you already have good credit or don’t have any big plans for your credit, hundreds of dollars per year for credit reporting on your rent is not worth the cost. You can do the same with good credit habits using a secured credit card, student credit card, or another credit card with a much lower cost, if any. Why pay for something you can get for free? If it isn’t urgent, you shouldn’t.

Most people are best to follow these simple steps to improve your credit without spending an arm and a leg to get your rent counted as a credit card payment. Here are some basics to raise your credit score over time:

Pay off credit card balances – Getting your balances to $0 is the fastest way to raise a credit score in many cases. Contrary to a popular myth, there is no benefit in carrying a balance. It just costs you money and hurts your credit score.
Always pay on time. This is one of the biggest factors in your credit score. Never, ever pay late. It’s better to avoid using credit altogether than use credit and miss payment due dates. It takes seven years to fix a history of late payments.
Take on new credit responsibly – Applying for credit and opening new accounts temporarily lowers your credit score. But more accounts with perfect payment histories raises your score over time. Remember these credit results before signing up for any new credit account.

Joining the 800+ credit score club is simple, but often easier said than done. Following some basic rules will help you grow your credit score without the big costs of a rent to credit reporting service.
Keep a long-term focus with your credit
Rent credit reporting companies often advertise that putting your rent payments on your credit is a quick fix to past credit mistakes. That is an exaggeration. There are no quick fixes to credit problems. It takes 7 to 10 years in most cases for past blunders to drop off of your credit history.

With that long-term in mind, you may decide it is worth it to get your rent on your credit report. But don’t feel pressured to do so. In most cases, you can get the exact same service for no cost from any major credit card issuer. Just make sure to use those cards responsibly or you could end up in worse credit shape than you are today.

About the author

Eric Rosenberg

Eric Rosenberg

Eric Rosenberg is a finance, travel, and technology writer originally from Denver, Colorado living in Ventura, California. When away from the keyboard, Eric he enjoys exploring the world, flying small airplanes, discovering new craft beers, and spending time with his wife and baby girl. You can connect with him at his own finance blog Personal Profitability.

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