Having a positive credit history and a high credit score has many benefits. These can include loans with lower interest rates, higher chances of getting approved for a car or home loan, and an easier time in getting rental housing. But how does someone build and improve their score without taking on new loans and credit? One path is to pay rent on time.
Credit bureaus will include rent payment information in credit reports if they receive it. For properties that work with PayLease to enable online payments, Credit Reporting is a service that will share a resident’s rent-related payments with Experian RentBureau® and TransUnion. There is no charge to either the resident or the property manager to use our Credit Reporting feature. Experian and TransUnion credit reports are used by various types of credit-granting institutions, including banks, auto finance companies and telecommunications providers.
Win-Win Benefits of Credit Reporting Rent Payments
Credit reporting is a win-win for residents and property managers, offering the following benefits:
- By paying online and on time, residents can build their credit history to potentially impact their credit score
- The on-time payment incentive for residents helps to improve cash flow for property managers
- Collecting more payments online also reduces the administrative workload for property managers
In addition, credit reporting can be a differentiating selling point when managers are advertising their properties. The article, “9 ways to build credit without a credit card” says, “If you are evaluating a rental or you currently rent, you should ask the landlord if they will report your rent payments. Some online rent payment service providers let you pay your landlords electronically and will report your rent activity to credit bureaus if requested.” In a hot rental market, any advantage helps.
Advantages of Positive Credit Reporting
Residents can opt in to have rent-related payments made through PayLease applied to their credit history. PayLease will transmit updated rental payment data from participating residents to the credit bureaus on a monthly basis. Only positive, on-time rental payment data is submitted. This is an important distinction because credit reporting is used as an incentive and a draw for responsible, reliable tenants. If someone does not intend to pay on time, they likely won’t opt-in to this service.
PayLease has taken the stand not to report negative information for a number of reasons. Negative information on a credit report typically lasts for 7 to 10 years. If there is a billing or payment error on the part of the property manager and rent is reported late, the recourse for the tenant is to submit an explanatory statement to the credit agency for inclusion in their records. This will no doubt cause distress and extra work for both the resident and the property manager, and result in a poor resident experience and bad public relations for the property. Our philosophy at PayLease is to use credit reporting as a “carrot” to help your property stand out to the best possible residents.
Credit reporting is a free service for property managers and residents. If you want more details about credit reporting for your property contact your Client Success Representative.
- Credit.com, 9 Ways to Build Credit Without a Credit Card, http://blog.cred it.com/2018/03/9-ways-to-build-credit-without-a-credit-card-121412/