The ability to report rent payments to a credit bureau benefits both landlords and tenants, and the idea is quickly catching on. For many, now is the time to explore the logistics of rent reporting.
Landlords may find that rent reporting:
Tenants may find that rent reporting:
Why do Tenants Want to Report Rent?
Good credit builds over time and requires a mixture of credit accounts. For those who are new to credit or new to the country credit is often difficult, if not impossible, to establish. This can make it very difficult to qualify for a loan, an apartment rental or even a job. The traditional way to build credit is to take out a credit card, springboard that credit into a car loan, and eventually take the step of securing a long-term mortgage. As credit matures, consumers benefit with an improved credit report which will qualify them for the best interest rates and financing terms, making it easier to build wealth.
But more tenants today are staying in the rental market, either as a lifestyle choice or because mortgage loans are more difficult to obtain and housing is becoming more expensive. Over time, those renters fall behind homeowners who benefit from making monthly credit payments, forcing tenants into a downward spiral of spending more of their income on interest and fees to access credit lines.
Rent payments, like credit cards and mortgages, only count if they are recorded and tracked by the credit bureaus. Rent is the single largest monthly expense most tenants pay. If tenants report those rent payments to a credit bureau, they would stand to gain by building credit faster. Tenants with good credit scores may even be able to qualify for lower security deposits and rent-to-own programs.
Why do Landlords Want to Report Rent?
Reporting rent to credit bureaus is a new way for landlords to help their tenants build credit and improve their financial health. And, it’s an easy way for landlords to set themselves apart from the competition by offering an amenity that helps tenants reach their long-term financial goals.
For landlords, one of the major benefits of rent reporting is that it may lead to increased on-time payments. Tenants who know their rent payments are being reported to credit bureaus are likely to be more diligent about making timely payments.
Another benefit for landlords is that rent reporting can make it easier to collect late payments as a landlord may choose to report a tenant not paying rent. Late payments can impact a tenant’s credit score, making it more difficult for them to rent from other landlords in the future. By reporting rent payments to credit bureaus, landlords can give tenants an incentive to pay on time and avoid impacting their credit score negatively.
Rent reporting may also help attract higher-quality tenants. Tenants who are worried about their credit score may be more likely to choose a landlord who reports rent payments to credit bureaus. Tenants who are likely to default on rent payments with self-select out.
Finally, reporting rent payments to credit bureaus can increase the value of your property. When tenants experience the benefits of good credit, they are more likely to renew their lease. This saves you from having to find a new tenant and go through the time-consuming and costly process of screening and signing a new lease.
Who Can Report Rent Payments to a Credit Bureau?
To maintain the integrity of information reported by credit bureaus, only approved entities can report consumer payment history. This is true of credit card companies, auto and home finance companies, and it is true of landlords. For tenants to report monthly rent payments to a credit bureau, the landlord’s involvement is essential to submit the information.
Large landlords and property managers have always had the ability to rent payments to credit bureaus on behalf of their tenants. However, the process was often time-consuming and required special software or integrations. For many small landlords, the process was simply not worth the effort.
Now, there are companies that handle all of the paperwork and technical integrations for landlords so they can focus on their business. And because these services use the latest technology, reporting rent is now easy and affordable for small landlords as well. Services like FrontLobby allow landlords of any size to join the rent reporting revolution and help their tenants build credit.
Traditionally, landlords needed to utilize a rent payment platform that also offers rent reporting to see an impact on a tenant’s credit report. These services typically charge a start-up fee along with monthly fees. Some services require a landlord to maintain a minimum number of tenants or monthly rent balance, which makes this option less appealing for smaller landlords.
FrontLobby is the ideal option for landlords who do not wish to change their current rental payment platform or method for accepting rent. FrontLobby specializes in rent payment reporting and tailors its service to tenants and landlords.
To start reporting rent payments to credit bureaus, landlords need to sign up with a service like FrontLobby. Once you’re registered, simply invite your tenant to join. They will verify their identity and provide some basic information. After that, the landlord will confirm the tenant’s monthly rent amount and payment date. From there on out, rent will be reported automatically.
Step 1: The landlord or tenant creates an account. Sign-up is free
Step 2: The landlord or tenant creates a lease record
Step 3: Monthly rent payments details are recorded and shared with credit bureaus
Step 4: The tenant is able to see a new tradeline on their credit report
All a tenant needs to do is continue to pay rent on time each month. If a landlord chooses to report a tenant not paying rent they do not require the tenant’s consent to do so. Landlords can also report rent payments for past tenants. This is beneficial if you have a former tenant with a debt owing. Simply gather the required information and submit it to the credit reporting agency through FrontLobby.
At anytime, the tenant can access the rental history as a Tenant Record to share with prospective landlords. The tenant not only has an opportunity to earn better credit, but to improve their rental history at the same time. In a tight rental market, that can make it easier to compete with other applicants for the best rental properties.
More and more tenants are realizing the importance of reporting rent payments to create a better credit portfolio. In fact, most tenants say they would prefer a landlord who reports rent.
If you’re not sure if your landlord reports rent payments, the first step is to check your credit report. If you don’t see a record of your rental payments, contact your landlord or property manager and ask if they would be willing to start reporting. You may be surprised at how many landlords are happy to comply with a request like this, especially if it means retaining high-quality tenants.
When applying for vacancies, tenants should ask prospective landlords whether this service already is in place. If not, it’s typically an easy sell to get landlords to consider setting up an account with FrontLobby. What landlord wouldn’t want tenants who ask to track their on-time rent payments?
While some landlords may be hesitant to sign up for a rent reporting service, there are several compelling reasons to do so. Landlords who submit rent on a regular basis are more likely to:
When selecting a rent reporting service, it’s important to choose one that is reputable and works with the major credit bureaus like Equifax. FrontLobby is an industry-leading rent reporting service that offers a number of features and benefits for both landlords and tenants. It is committed to helping landlords simplify their rental property management while rewarding good tenants by allowing them the opportunity to build credit and share their good rental history with other landlords.
Focusing solely on landlords and tenants, FrontLobby can offer valuable education and assistance, like providing sample disclosures that landlords may provide to tenants to explain the benefits of rent reporting. The company also provides sample lease provisions that allow tenants to better understand their responsibilities under the lease agreement and to maximize the value of rent reporting to build credit.
Once landlords learn how to report rent payments to a credit bureau, they can enjoy enhanced tenant screening abilities like access to the Tenant Records database, the ability to register on tenant credit reports and to report delinquencies to support debt recovery efforts. Tenants can build credit and a verified rental history to gain a competitive edge when applying for rental properties while monitoring their credit report.
As the importance of credit scores continues to grow in our society, so does the need for new and innovative ways to build credit. Rent reporting is a tool that can help millions of people access the credit they deserve and save housing providers from unnecessary financial risk. And, with the help of new technology, it’s now easier than ever.
Disclaimer
The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.
Landlords, Property Managers and Tenants can report rent payments and rental history data to Landlord Credit Bureau through FrontLobby.
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