Does paying the rent help build your credit score?

If you’re hoping that your rent payments will help you build the credit history needed to apply for a mortgage, you might be in for a rude awakening.

Are you a recent college grad? Maybe you’re working downtown and just leased a fabulous apartment, figuring you’ll rent for a few years before purchasing a home.

But if you’re hoping that your rent payments will help you build the credit history needed to apply for a mortgage, you might be in for a rude awakening.

“Generally speaking, rent payments are not reported to the credit bureaus unless a tenant — or a property manager on a tenant’s behalf — has enrolled in a rent reporting program,” said Courtney Alev, a consumer financial advocate for Credit Karma. “There may be instances where a landlord or property manager automatically reports rental payments to the bureaus, but it’s typically on the renter to sign up for the service.”

While timely rent payments are not routinely reported to the credit bureaus, failing to pay your rent could show up on your credit report if the balance went to a collection agency, according to Rod Griffin, senior director of consumer education and advocacy for Experian, one of the three major credit bureaus.

According to a May 2019 survey commissioned by TransUnion, another credit bureau, about three-quarters (73 percent) of renters would be more likely to make on-time rent payments if property managers reported rent payments to a credit bureau. Moreover, when given a choice between two similar apartment properties, two-thirds of renters (67 percent) surveyed would choose the rental unit with reporting already in place.

Still, most landlords haven’t jumped on board. Van French, director of rentals for Gibson Sotheby’s International Realty in Boston, said he has been reviewing credit reports of prospective renters for seven years and hasn’t seen one credit report with rent reported. “It’s a shame because in a lot of cases renters are paying $2,000 to $4,000 a month,” he said. “Paying rent is a great way to build credit, but it isn’t going to help if no one is reporting it.”

Douglas Quattrochi, executive director of MassLandlords, a trade group that represents small landlords, said one reason why landlords don’t report is because they would have to respond to disputes. “You have very tight timelines to respond to disputes, so most landlords wouldn’t be up to it, even the large ones,” he said. “They just want to manage their properties, collect rents, and fill vacancies, and credit reporting is definitely not a trivial thing to do.”

Still, Maitri Johnson, senior vice president of tenant and employment screening for TransUnion, said renters should make it a priority to get their timely payments reported to the credit bureaus. She said a recent graduate with her first job and no credit score whose on-time rent payments are reported can go from zero to a score of 661 in just six months.

If you want your rent payments to be reported to build or bolster your credit history, here’s what to do:

Choose the right landlord. Ask whether rent payments are reported before you decide on an apartment. “As a renter, pick places that offer reporting as an amenity and service to you because the large monthly payment you’re going to be making will matter,” said Johnson. That may not be easy, though. A June 2023 report by TransUnion found that only 36 percent of property managers who are aware of the practice of reporting rent payments to credit reporting agencies do so.

Work with a third-party company that furnishes rental data to the credit bureaus. Examples are Self, which is free and reports to all three bureaus; Rental Kharma, which charges a $75 setup fee and $8.95 a month; and RentHelper, which is free to renters and reports to TransUnion. Experian Boost, also free, is particularly good for those with little or no credit history, Experian’s Griffin said.

Go back to the basics. Consider getting a credit card, using it for a small transaction each month, and then paying that bill in full. “Using a credit card responsibly is a common way to build credit effectively, but it requires discipline,” said Credit Karma’s Alev. Bear in mind that if you charge your rent, your credit report will reflect only the timely payment of the credit card bill. It won’t show what the charge was for, so that rental history won’t be displayed to future creditors.