Getting Due Credit

Does your landlord love you because you’re always on time with the rent? Well, your good reputation may spread to others, like credit card issuers.

That’s because there’s a movement underway to include rental payment history in

“It’s fantastic,” to have rents included, says John Ulzheimer, president of consumer education for SmartCredit.com.

Many millions of young adult renters and others who don’t have many credit accounts, as well as renters who’ve previously had financial difficulties, could boost their credit rating through on-time rent payments, Ulzheimer says.

Here, a look at who’s looking at rent payments:

The Count Begins

Experian, one of the three major credit-reporting bureaus, began reporting on 8 million renters last year through its subsidiary RentBureau.

Another major bureau, Equifax, reports that it does not collect rental data, and TransUnion, the other big bureau, says that it has rental information for tenant-screening use by landlords only.

While 8 million is a big number, it’s remains only a small portion of the many millions of renters nationwide. Currently, Experian is collecting rental data only from property managers, who usually work for larger-scale apartment complexes. “We’re working on a partnership that would allow individual landlords to participate as well,” reports Brannan Johnston, vice president of Experian’s RentBureau.

If you’re not one of those 8 million, it’s likely a credit report compiled by CoreLogic, a consumer information firm based in Santa Ana, Calif., will have information about when you take a lease – in addition to any subsequent eviction or collection notices – but not monthly payment data. Moreover, Fair Isaac Corp., the firm that develops FICO credit scores, is working with CoreLogic to introduce a numerical score that indicates credit worthiness using this information.

The Thin Are Bulking Up

It may seem that credit cards are more American than apple pie, many people have no or limited credit. Last year, Experian included only positive rental payments in its report but this year is including negative information, too. Because they added in only positives, consumers with “thin” credit – meaning two or fewer credit-related items on their records – tended to show a significant boost in their credit score, relates Johnston. For those with many credit items on reports, there was “less general score movement,” he says.

Lenders Take a Look

If renters apply for a mortgage someday, the lender will “track down your rental payments one way or another,” asserts Neil Caron, vice president of Freedom Mortgage in Mount Laurel, N.J.

Usually, lenders call landlord or management companies for the information, but having a score or credit report that reflects the data will make it easier, Caron adds.

Both CoreLogic and Experian say their scores will be used by a variety of credit-extending firms, not just mortgage lenders.

When Is ‘Late?’

When rent isn’t paid on the defined due date, “it’s legally late,” says Janet Portman, an attorney and co-author of “Every Tenant’s Legal Guide, 7th edition” (Nolo Publishing, 2012}.

However, “some states [have laws] that give you a grace period of two to five days,” she says.

When landlords report late pays, their statement is duly recorded by the bureau.

The fact that landlords can report late pays without input from a renter disturbs both Portman and Chi Chi Wu, an attorney with the National Consumer Law Center. “In a lot of jurisdictions, it is a tenant’s legal right to withhold rent if something is wrong, like the hot water isn’t working,” Wu says.

Both CoreLogic and Experian say that consumers have the right to dispute any data they deem inaccurate in their reports. But that’s a cumbersome process, and put onus on the renter, Wu notes.