Rentroster is a brand new way for tenants to report their rental payment performance to credit bureaus. Rent is reported to the credit bureaus in the same way Mortgage and loan repayments are reported by lenders to the credit bureaus. Rentroster is a credit reporting agency which collects valid rental performance data from tenants and reports this to the credit bureaus.
So its a Debt free way to build credit?
Yes. Unlike traditional methods credit is built such as loan or mortgage repayments, paying rent does not involve getting a loan and showing your ability to repay your loan which then gets recorded on your credit file. Rent payments just as mortgage payments or utility payments are financial commitments and as such your payment performance history indicate your ability to adhere to your commitments.
Unlike loans, credit cards etc rent reporting requires you to opt-in for your rent performance data to be recorded and reported.Reporting your rent will allow you to build your credit history and credit score.
You can of course always opt out of reporting your rental performance data to the credit bureaus. In the future this might become a legal requirement to report your rental performance data.
Can anyone report rent payments?
In practice, to report rent you need to be a tenant and your landlord cannot be your close family members or friends.You can easily sign up to Rentroster with your tenancy details and begin reporting your rent to boost our credit score and history. In rare cases we may ask you to upload certain pages on your tenancy agreement.
Your landlord does not need to be signed up to Rentroster for you to report your rent payment.
How does rent reporting help?
Rent reporting will help you have a more indepth credit history and boost your credit score if you make on time payments and are not behind on your rent. This will allow you to qualify for better interest rates on loans or credit cards which will save you a lot of money in interest rate charges. At this point in time in the UK, Only Experian collects and stores rental data on a tenants credit file.
This means that the lender you take your loan out will need to be using an experian service to find your credit file (and credit worthiness) for you to see much benefit from rent reporting at the moment. This will undoubtedly change in the future as the remaining two credit bureaus( Callcredit and Equifax) begin to collect and store rental payment performance data on tenants credit files.
At the moment there are five core sections that affect how your credit score is generated. These are your payment performance history on loan products, credit cards etc, your debt utilization on your overdraft or credit cards, Hard searches by lenders, how long you have had each account on your credit file open for and the types of accounts you have. Your payment performance history usually represents a significant factor with a weighting of at least 35% of how your score is generated. It isn't very clear how rent payment will be ranked but we suspect is it being taken into account as payment performance history and this should be the very reason every tenant reports their rent payment via Rentroster.
Younger tenants have much to benefit from rent reporting as they usually have thin credit files meaning they could graduate from uni without a strong enough score or in depth credit history to attain credit products such as credit cards.
For those who don't even have a credit file, this opens the door for them to build up their scores and file gradually.
Rent is usually the largest monthly expenditure for most tenants. Why not get credit for it?