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How to make your rent payments show up on your credit score

How to make your rent payments show up on your credit score
Written by Publishing Team

Rent is the biggest monthly expense for most Americans, and there are ways renters can use on-time payments to boost their credit score. But they cannot do it alone.

“It would be great to see that eventually develop into rental payments, making it move to credit reporting automatically,” said Sarah Ratner, credit analyst at NerdWallet. “This is something I would like to see because I think a lot of people would benefit from it. But for now, you need to use a third party service.”

Third-party services include those used by private credit card tenants to pay rent or apps that report rent payments to credit bureaus. But Ratner says many third-party services require a startup fee or a monthly subscription rate — unless the owner agrees to cover the cost.

However, one company, Piñata, offers a first-of-its-kind program that is free for renters. The company offers the service for free by working with companies that offer rewards on the app while tenants build credit.

“For us, it’s really about helping people who have low to medium credit scores; and also poor credit profiles,” said Lily Liu, CEO and co-founder of Piñata.

Leo says Piñata is not a panacea for bad credit. It will take a long time to pay the rent to get the big hits back to a poor credit score.

“One of the big risks we always want to remind renters of is that reporting rents is just one small aspect of your overall credit score,” Liu said. “It is important to look at other major life expenses.”

It’s also important to remember that anything can boost a credit score — just as anything can hurt a credit score, Ratner says.

“Obviously, if you have a late rent payment, it could hurt you. It’s kind of like paying any other bill late,” she said. “It can show up on your credit report, and it can temporarily put pressure on your balance.”

Rathner also recommends that with any rental reporting service, users first consider what will happen if they cancel due to a move or if the user is in conflict with the landlord. Piñata allows users to cancel at any time and for any reason.

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