Your typical American consumer knows that having a good credit score can be the doorway to loans with excellent interest rates when they buy a new car or a new home. The problem, according to a new survey from TransUnion, is that many renters make the false assumption that their on-time payments will help give a boost to their credit score, which in many cases it simply won’t.
In fact, there are quite a few renters that are completely misinformed when it comes to the mysterious three digit number that is their credit score, and almost 50% of renters between the ages of 18 and 64 are under the impression that the rental payments they make every month to their landlords will automatically be reported to the three biggest credit bureaus if they make them on time.
This information comes from a survey that one of those “big 3” credit bureaus, TransUnion, just completed. The TransUnion survey also showed that, when it comes to paying for things like their cable bill, Internet, smartphone and utilities, over 50% of renters believe that credit bureaus will be notified when they dutifully make these payments on time.
That being said, both TransUnion and Experian, another one of the “big 3” credit bureaus, have both recently started to collect the information about the rental payments that consumers make and factor that into their credit report. In practice however, the typical landlord doesn’t share any information with data collectors for credit bureaus on your rental payments, whether they’re on time or not.
That’s according to the senior vice president of TransUnion’s consumer division, Ken Chaplin. Mr. Chaplin also made a point of saying that payments to utility companies, cable companies and cell phone service providers are typically not reported.
The most common credit score that lenders use, called the FICO score, is typically unaffected by any rental payments or other type of payments that a consumer makes, even if that consumer’s landlord or service firm is one of the few that actually does report them. In other words, if you’re a consumer that’s counting on your on-time monthly rental payment to help you increase your credit score, you’re probably out of luck.
That being said, if you don’t make your rent or utility payments on time, it can hurt your credit score, and many landlords and utility companies report their delinquent customers to credit bureaus. Even worse, your account could end up in collections, something that will cause you all sorts of stress and anxiety, as well as costing you extra money.
