Friday, February 4, 2011

Rent Payments Might Soon Affect Your Credit Score

Customers who struggle to build a good credit profile might soon get a boost by just paying their monthly rent promptly.

One from the country’s 3 significant credit rating agencies has become incorporating positive rental payment data into its scoring methodology. Experian will track the details by means of its RentBureau division, a specialty credit agency that gathers payment data from a network of property managers covering far more than 8 million renters nationwide.
A Collection Agency

So far, only negative rental info would appear on the consumer’s credit report, generally after a landlord sent the account to some collection agency. However the Experian announcement means an incredible number of consumers can construct and strengthen their credit by staying current using their rent.

“Given that one-third from the U.S. population rents, we felt it had been imperative to reflect the accurate creditworthiness of these people who responsibly pay their rent,” Brannan Johnston, vice president and managing director at Experian RentBureau, said inside a news release. “We are thrilled to be industry leaders in this initiative, and look forward to offering this credit-building avenue to residents.”

Renters should take heed, though, because this will soon turn out to be a two-way street. Experian plans to report only positive data this year. But negative rent information, i.e., late payments, are likely to become component of the mix in 2012.

Which means renters could actually damage their credit score by acquiring behind on their rent.

At this point, Experian is the only credit bureau to contain rental data - and, again, that’s just for renters whose landlords and property managers participate in the RentBureau reporting system.

But this first foray could definitely whet the appetites of lenders and underwriters nationwide and spur severe demand across the board. Experts at FICO, the predominant credit scoring system for the lending industry, have said their experts will evaluate the Experian rental data to determine regardless of whether it should factor to their scoring model.

The inclusion of rental data could ultimately provide a jolt towards the property lending industry. Within the temporary, it's prone to assist thousands of responsible, under banked consumers access credit they richly deserve.

It’s also crucial to keep in mind that customers of stripes can take basic, concrete steps to enhance their credit rating. Diligence and commitment are essential.


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  3. do not start increasing your normal expenses just because you can. In 6 months your credit score will be better, you will be less risky and you will be offered better conditions when required, for example in case of new findings or others that will be explained further. free credit reports