In recent news, it has been suggested that the reporting of negative information could impact tenants who might withhold rent to force landlords to maintain or repair buildings. However, with the introduction of rent reporting services by companies like Zillow, tenants now have the opportunity to use their rent payments to strengthen their credit scores.
What Zillow’s Rent Reporting Service Offers
Zillow’s service deems payments on time if they are received within 30 days of the due date, and these timely payments are reported to Experian. However, payments made after the 30-day window are not reported. As of now, the service is available to tens of thousands of renters, providing them with the chance to improve their credit history.
The Impact of Rent Reporting on Credit Scores
It is important to note that not all credit scoring systems can factor in rent payments. While the latest versions of FICO credit scoring systems can incorporate rent data, the older FICO 8 version cannot. On the other hand, all versions of VantageScore, which is owned by major credit bureaus, are able to consider rent payments when calculating credit scores.
The Cost of Rent Reporting Services and Other Credit-Building Options
The availability of rent reporting services varies, with some being free for both landlords and tenants, while others may charge one-time or monthly fees. It is essential for consumers to assess the potential benefits of having their rent reported, especially if they already possess top-tier credit scores. For those looking to build credit through other means, options such as opening a secured credit card or obtaining a credit builder loan from community banks and credit unions are worth considering.
Conclusion
Utilizing rent payments to enhance credit scores can be a beneficial option for tenants, especially with the introduction of services like Zillow’s rent reporting. By understanding the impact of rent reporting on credit scores, as well as considering other credit-building alternatives, individuals can take proactive steps towards improving their financial standing.
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