How to use Rent Payments to Increase your Credit Score
Can your rent payments help you build credit?
Absolutely! With rising housing costs across the nation, tenants are paying for more rent each month than ever before. Did you know that the national rent average is over $2170 per month?!? Imagine how helpful it would it be if tenants could utilize that monthly payment to build their credit. And if it could benefit landlords too! We’ve done some digging and found a few companies that make this possible.
Companies that help renters build credit:
There are several companies that help renters use their payments to build their credit. Each of them take a slightly different approach:
Landlord Credit Bureau
When it comes to boosting your credit score with the Landlord Credit Bureau, teamwork between landlords and tenants is key. You both play a crucial role in reporting your monthly rent payments to this trusted third-party company, which then shares data directly with Equifax. The good news is, signing up for the user-friendly "FrontLobby" rent reporting platform is a breeze, and it only costs $4 per month. Plus, the process is super quick, taking just a few minutes each month to update and report. The best part? You can keep paying your rent directly to your landlord – no need to change a thing. Your credit score and your wallet will thank you!
Chexy
Chexy is a Toronto-based startup that simplifies rent reporting to Equifax, with a unique twist that tenants will love – the option to pay with a credit card! Not only does this offer a chance to rack up those valuable reward points, but it also provides the dual benefit of creating a separate credit card tradeline in addition to your rent reporting tradeline.
Here's how it works: You make your rent payments directly to Chexy, and they handle the rest – paying your landlord and updating your credit bureau report. It's hassle-free and efficient! The cost for this convenience is $9.99 per month when you pay your rent via your bank account. If you opt for the convenience of using your credit card, there's an additional fee of 1.75% of your monthly rent. But wait, there's more! Chexy offers a handy calculator on their website where you can input your credit card and rental payment details to see how your credit card rewards stack up.
With Chexy, you get the best of both worlds – a simpler way to report your rent and a chance to boost your credit score while enjoying those credit card perks. It's a win-win!
Borrowell
Borrowell helps to improve your credit score effortlessly! For just $8 a month, you can take control of your credit journey. Here's the best part – it's as easy as downloading their user-friendly app and updating it every month when you make your rent payments.
What sets Borrowell apart? Well, they've got a nifty trick up their sleeve. Your rent payments are verified through your electronic banking records, eliminating the hassle of landlord verification and the need for their cooperation. Plus, you can continue making your rent payments directly to your landlord, with no third-party involvement required.
Borrowell simplifies the process, empowers you to boost your credit score, and puts you in the driver's seat of your financial future. Join the Borrowell community today and take the first step towards a brighter credit outlook!
How does reporting rent benefit tenants?
Rent reporting empowers tenants to build and leverage their credit history, leading to improved financial opportunities and increased peace of mind when it comes to their housing and financial stability.
Specifically…
Tenants have the opportunity to strengthen their credit profile without incurring additional debt.
They can earn reward points by using their credit card when selecting a service that supports this payment method.
Rent reporting can assist in resolving landlord-tenant disputes efficiently.
Tenants can showcase their positive payment history to prospective landlords during the initial rental application process.
It enhances communication between landlords and tenants, often including automatic notification features.
Certain platforms offer the convenience of making rent payments on behalf of the tenant, guaranteeing on-time payments.
How does reporting rent benefit landlords?
Sure, landlords may want to help out their tenants, but how does rent reporting actually benefit landlords? Reporting rent payments can not only mitigate financial risks but also lead to a more stable and profitable rental property business.
Specifically…
Decreases incidents of rent delinquency and late payments
Facilitates reporting for Landlord-Tenant disputes
Attracts responsible tenants who prioritize their credit
Enhances Landlord-Tenant communication, often with automated notifications
How does reporting rent benefit purchasers applying for a mortgage?
When you're new to Canada and building credit, it's a bit of a chicken and an egg story. You need to obtain credit to start establishing a good credit score, but in order to do that, you need to have "hard inquiries" against your credit bureau and each inquiry decreases your credit score!
Many clients end up with many hard inquiries but don't actually qualify for the credit. As a result, they're left with no credit to work with and even a lower score.
How does reporting rent help with this?
"Rent" is a sure fire bet - you're paying it!
Reporting rent to the credit agencies means that you're obtaining an official record of solid repayment.
There’s no risk of taking hard hits to your credit without a positive outcome.
