A 2017 TransUnion study followed renters to see what happened to their credit scores when the renters reported their rent payments to credit bureaus. You know what happened? Their credit scores improved by an average of 16 points within six months!
If you’re hoping to increase your credit score, it’s more than worth it to pay rent online. Doing so makes sure your payments can be reported, makes you look good, and gives you an opportunity to boost your score even more. Keep reading to learn how it works.
Ensure Your Payments Are Reported
Paying rent online is the key here.
“Simply paying your rent will not help you build credit,” says Bev O’Shea at NerdWallet. “But reporting your rent payments can help you build credit—especially if you are new to credit or do not have a lot of experience using it.”
At Villa Serrano, we offer an online rental payment system that reports information to the credit bureaus. That way, they know that you make an on-time rental payment each month, and that helps increase your credit score.
Show Credit Bureaus What They Are Looking For
What elements do credit bureaus use to determine credit scores? Here’s one example from Experian:
- Use of credit cards
- Payment history
- Applications for new loans and credit
Paying rent fits under the “payment history” category. When you pay rent online, those payments become part of your payment history. As you pay on time and in full and continue to do so, that reflects in your credit score, too.
Use a Credit Card Specifically for Rental Payments
Here’s a great tip: “Open a credit card and use it to pay your rent . . . then pay your credit card balance in full each month,” says LaToya Irby, credit expert for The Balance. “The timely credit card payments will help boost your credit score.”
You may have seen people use a credit card exclusively to pay for gas so they can get rewards points, and this is a similar principle: paying rent with a credit card just for the credit boost! You don’t have to pay your rent with a credit card, but it can increase your credit score in combination with the benefits of paying your rent online.
Increase your credit score by paying your rent online through the resident portal. This will ensure your payments are reported to credit bureaus, showing them exactly what they are looking for. Plus, if you choose to pay rent with a credit card, you may increase your score even more. Happy credit-score-boosting!