Rental Tradelines: The Secret to Building Your Credit with Rent

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When you’re building credit from scratch, lenders are often reluctant to give you a credit account. When you’re rebuilding a poor credit score after making a few mistakes, you may also have lingering monthly payments, which makes new debts burdensome.

Rental tradelines can be a great way to increase your credit score without dealing with either of those issues. Here’s everything you should know about them.

What Is a Rental Tradeline?

Not to be confused with tradeline renting, a rental tradeline is an entry in your credit report that represents your rental payment history at a particular residence. For example, one might detail the timeliness of your rent payments during the twelve-month lease you completed at your last apartment.

Rental tradelines are separate from financial tradelines, which detail your activities with traditional credit accounts. Many of the differences between them make rental tradelines attractive. For example:

  • You don’t have to undergo a credit check to get a rental tradeline.
  • Rental tradelines don’t require you to take on extra monthly payments to build a positive credit history.
  • You can get faster credit score boosts from rental tradelines since you can report two years of past rental payments at once.

Unfortunately, rental activities don’t traditionally show up on credit reports because landlords have rarely bothered to report them. It costs them money, and rent payments didn’t affect older FICO Score versions, so it’s never been an industry standard.

However, that began to change once FICO issued credit scores that take your rental history into account. It incentivized consumers to start sharing their rent payments with the credit bureaus, and rent reporting businesses started to provide that service.

In addition, studies found that renters are less likely to make late payments if their property management company sends them to a credit reporting agency.

That’s incentivized landlords to start reporting rental payments too, and the practice is becoming increasingly popular. (Also see our How to Add Tradelines to Credit article.)

Rental Tradelines vs. Financial Tradelines

Financial tradelines are the credit accounts your creditors have reported to the credit bureaus. They form the bulk of your credit data and include things like your student loan, secured credit card, and mortgage. Also take a look at our list of additional tradelines to build credit link.

As mentioned previously, there are many differences between rental and financial tradelines. Here are some of the most significant ones to be aware of when you’re deciding which of them would be the best way to improve your credit score.

Rental Tradelines Do Not Impact Credit Utilization

In simple terms, your credit utilization ratio represents the amount of debt you have outstanding compared to the amount you can borrow. It’s a significant aspect of the “Amounts Owed” factor in your credit, which is worth 30% of your FICO Score 8.

Credit utilization typically refers to revolving debts, like credit cards. In such cases, your credit utilization ratio equals your current balance divided by your credit limit. For example, if you owe $500 on a card with a $1,000 limit, your utilization is 50%.

Unlike financial tradelines, your rental tradelines have no impact on your credit utilization ratios. As a result, they don’t affect the “Amounts Owed” portion of your credit score. If you have a bad credit score, also check out our How to Rent With Bad Credit article.

Rental Tradelines Do Not Affect Debt-to-Income Ratios

Your debt-to-income (DTI) ratio doesn’t technically affect your credit score, but it is a significant consideration for many creditors. The higher it is, the less likely you can afford additional financial burdens.

Your DTI ratio equals your total monthly credit obligation divided by your gross monthly income. For example, say your only monthly debt payments are $500 for an auto loan and $400 for a student loan. If you make $4,500 per month, you have a 20% DTI ratio.

Because your rent payment isn’t technically a debt, you can add rental tradelines to your credit report without worrying that they’ll increase your DTI ratio and make you seem riskier to creditors.

Rental Tradelines Do Not Affect FICO 8 Scores

FICO is the creator of the most popular consumer credit scoring models in the United States. They’ve issued many different versions over the years, but lenders tend to favor the FICO Score 8 these days.

Unfortunately, rental tradelines don’t factor into the FICO Score 8 algorithm. In other words, reporting a positive rental history to the credit bureaus won’t improve the most popular score among lenders today.

However, VantageScore 3.0 and 4.0 and FICO Score 9 and 10 do factor in any rental history that shows up in your credit file. 

There are some lenders that use these newer models. As more lenders switch to the more recent models, rental tradelines will become increasingly beneficial.

Do Rental Tradelines Work?

In a word, yes — rental tradelines absolutely work. If you have a positive rental payment history, reporting it to a credit bureau can add a significant number of points to your FICO Scores 9 and 10, as well as your VantageScore credit scores.

In fact, there are multiple studies from reputable sources that demonstrate just how effective they can be. For example, to promote their Experian RentBureau service, Experian conducted one that yielded the following results:

  • Nearly 75% of those with existing FICO scores saw an increase in them after reporting positive rental tradelines.
  • 84% of people with subprime FICO scores saw them go up by at least 11 points.
  • Positive rent reporting increased the average VantageScore 3.0 by 29 points.

BoomPay, Digital Honey’s choice for the best rent reporting service on the market, also conducted a study on the subject. Like Experian, they also revealed some inspiring findings for people looking to improve their bad credit.

They found that consumers with enough credit history to generate a credit score see their scores go up by an average of 40 points in just 15 days after adding a positive rental history. That’s an incredible increase, especially in such a short time.

Those without scores can also experience excellent credit improvements. Some BoomPay customers reached a 670 credit score by reporting their rental payments alone, the minimum necessary for FICO’s “good credit” rating.

That’s remarkable for someone new to credit! You can also check out our Best Apps for Landlords to Collect Rent article if you are considering being a landlord rather than the other way around.

How Can I Get a Rental Tradeline?

If you want to add a rental tradeline to your credit report, you’ll need to pay for rent reporting services. We strongly recommend that you use BoomPay, which we consider the best rent reporter on the market.

With BoomPay, you can report up to 24 months of past rental payments for just $25 with a one-time enrollment fee of $10. 

If you want to report your ongoing rent payments, you can do so for as little as $2 per month when you pay for a year in advance ($24 annually).

Compare those prices to two of BoomPay’s top competitors:

  • Credit Rent Boost: $60 for 24 months of rent payment history and $45 for recurring rent reporting if you pay for it annually. They only report payments to two credit bureaus.
  • RentReporters: $94.95 signup fee and $95.40 for ongoing reporting if you pay annually. You get 24 months of rent payment history for free, but you can’t avoid the signup fee. They also only report payments to two credit bureaus. 

Not only is BoomPay far more affordable, but they’re also one of the only businesses that share your rental payment data with all three major credit bureaus. Most others on the market only report to one or two.

If you want to add rental tradelines to your credit report and see what benefits it can have on your score, give BoomPay a try today!

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For a more detailed analysis of BoomPay’s services, check out our comprehensive BoomPay Review!

Read the other articles in our tradeline series:

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