Bad Credit and Rental Payments

Recent findings from TransUnion show that the reporting of rental payments to credit bureaus has a positive effect for most consumers with problem credit

Renters with Poor Credit

Bad Credit and Rental Payments

Here at Auto Credit express we realize that a discussion about rental payments might not seem to have a lot in common with car loans and dealers that work with with bad credit, but it does.

In fact, paying regularly on both will help consumers with less than perfect credit raise their credit scores while establishing a positive credit history. New findings from TransUnion bear this out.

TransUnion Rental Payment Analysis

According to TransUnion, “those consumers who may be viewed as higher credit risks could experience positive effects with only one month of on-time rental payment information.”

Specifically, the report from TU noted that when rent payments were reported, eight of ten (79.1 percent, to be precise) consumers with subprime credit (what TransUnion defines as a VantageScore 2.0 score lower than 641 on a scale from 501 to 990) found that their credit score increased one month into their new apartment lease. Furthermore, close to 41 percent of subprime consumers experienced an increase in their VantageScore of ten points or more.

The consumers involved in the study were able to accomplish this because their landlords had signed up for a new service offered by TransUnion called ResidentCredit.

ResidentCredit

“Following the mortgage crisis during the last recession, home ownership rates have declined to 20-year lows as many consumers choose to rent. In fact, there are now 40 million American renter households in 2013, which is up nearly 5 million since 2007,” said Tim Martin, executive vice president at TransUnion. “Despite millions more renters, most rental payment histories are not provided to credit bureaus, and renters looking to improve their credit standing cannot do so.

To that end, TransUnion is introducing ResidentCredit(SM), a newly-expanded service that encourages property managers to report the payment performance of their apartment residents.”

According to TU, the process is quite simple, with property managers submitting resident payment data to TransUnion each month that includes the amount, timeliness and any balance owed. Once it’s received, the information will appear on the renters TransUnion credit report just like that of an auto loan or credit card.

TransUnion also notes that it is not charging any fees for this service and, if a property manager who is furnishing the data requests it, TU will share this information with the other national credit bureaus.

Size Matters

There is one small catch: At this point in the program, TransUnion is only working with property managers that oversee 100 or more units. Consumers living in smaller complexes, or those renting houses, or residents living in property where the manager is unwilling to use ResidentCredit are still left out in the cold.

The Bottom Line

The new ResidentCredit program from TransUnion is a step in the right direction as it has the potential to help millions of consumers with problem credit expand their credit history as well as raise their credit scores. We only wish the program embraced all renters – not just those living in complexes with 100 or more units.

Something else worth considering: for more than two decades Auto Credit Express has been helping credit-challenged buyers find those new car dealers that can offer them their best opportunities for auto loan approvals.

So if you find yourself in this situation, you can begin the process of rebuilding your credit now by filling out our rel=”nofollow”>online car loan application.

Posted on August 20, 2014 by in Credit Repair
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