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How Tenants Can Build Credit by Paying Rent and Boost Their Score

Having and building credit is an integral part of life. After all, you use credit to obtain mortgages, student loans, auto loans, and more. However, it’s hard to get these things without a good credit score. Building credit takes time, but it can help people in several ways. If you want to know how to build credit by paying rent, keep reading as we go over the importance of credit scores and how to boost yours. 

What Is a Credit Score?

A credit score is a number between 300-850 that essentially describes your creditworthiness. The higher your credit score, the better you look to a potential lender. On the other hand, if you have a low credit score, it could be a red flag to lenders. Additionally, it can be much harder to borrow money with a low score. 

Credit scores were created by the Fair Isaac Corporation, commonly known as FICO. While other credit score systems exist, most financial institutions use the FICO score to evaluate people’s credit. 

Here’s a basic idea of where you stand according to your credit score. 

  • Excellent: 800 – 850 
  • Very Good: 740 – 799
  • Good: 670 – 739
  • Fair: 580 – 669
  • Poor: 300 – 579

Your credit score is based on several factors, including the number of accounts you have open, your payment history, total levels of debt, and more. As such, lenders look at credit scores to determine the probability of a borrower paying loans back promptly. There are several ways to improve your credit score. But first, let’s go over how your score is calculated. 

How Is Your Credit Score Calculated?

The three major credit reporting agencies, Experian, Equifax, and TransUnion, report, update and store people’s credit histories. Although there may be differences between the three reporting agencies, five main factors are used to calculate a credit score. 

  1. Payment History– Your payment history accounts for 35% of your score and shows whether or not you pay your bills on time. 
  2. Total Amount Owed– The total amount you owe accounts for 30% of the credit score. This includes the total amount of credit available to a person and the credit utilization. 
  3. Credit History– Credit history counts for 15%, with longer histories more trustworthy. 
  4. Types of Credit– Next, the credit type accounts for 10% of your score and shows if you have several kinds of credit, like car loans and mortgage loans, credit cards, etc. 
  5. New Credit– New credit also accounts for 10% of your credit score and factors how many new accounts you currently have. 


How Can You Raise Your Credit Score?

If you want to raise your credit score, you can do a few things. For instance, you should always pay your bills on time. Remember, it takes around six months of on-time payments to see a difference in your credit score. 

Additionally, you can increase your credit line to allow yourself more credit and less utilization space. Along with that, avoid closing a credit card account. If you’re not using a particular credit card, just simply stop using it instead of canceling it. Unfortunately, depending on the age and type of credit, it can hurt your score if you close your account. 

Why Is Good Credit Important?

Good credit is vital for several reasons. For instance, landlords are more likely to rent you an apartment, you could be approved for a loan quicker, and an employer could choose you for a job above someone else. Here are a few other ways good credit can benefit you throughout your life. 

  • Lower Interest Rates – If you have good credit, you’ll likely get a lower interest rate compared to people with low credit scores. 
  • Easier Credit Approval – Additionally, banks and lenders are more likely to approve your applications if you have good credit. In other words, when you apply for a mortgage, auto loan, or credit card, you get approved easier. 
  • Better Loan Terms –  People with good credit often get better loan terms than people with poor credit. For instance, you could get a higher credit limit or a low fixed-rate mortgage. 

Overall, your credit is essential because it can benefit you financially. Whether you need a credit line increase or a mortgage loan, good credit can make it easier to obtain. Next, let’s go over how you can build credit by paying rent. 

How Can You Build Credit By Paying Rent?


Without a loan or mortgage payment, building credit can be difficult. On the other hand, it can also be hard to build credit while renting, especially if you’re a young, first-time renter. Luckily, there are ways you can build credit by paying rent.

Unfortunately, many people who don’t have much credit history do have an excellent rental payment history. However, this information doesn’t appear on your credit report and doesn’t affect your score. 

While you cannot report rental payments yourself, you can use a rent-reporting service that can get your credit to reflect your rent payments. Typically, it’s relatively inexpensive to use a rent-reporting system, ranging from free to around $100 per year. Sometimes, your landlord will even pay for it. 

To use rent-reporting services correctly, you must know which credit bureaus they’re reporting your payments to. Additionally, you’ll want to know which scores are affected by your payments. Let’s go over how you can build credit and report rental payments to boost your credit score. 

Build Credit by Paying Rent

The three credit bureaus, Experian, Equifax, and TransUnion, will all include rental payment information in your credit score if they have it. However, the two major credit scoring companies, FICO and VantageScore, handle rental payment information differently. Unfortunately, the most commonly used versions of the FICO score don’t include rent payments. 

On the other hand, newer versions of FICO and VantageScore, FICO’s competitor, consider rental payment information if it’s in your credit report. Luckily, there are several ways to get your payment records in front of lenders. Here are some of the services you can use to report your payments. 

Which Services Report Rent Payments?

You can report rent payments with any of the following services: 

  • Rent Reporters– This service has a one-time enrollment fee of $94.95. It includes up to two years of rental payments and reports them to TransUnion and Equifax. 
  • LevelCredit– LevelCredit charges a monthly fee of $6.95 to have rent payments sent to Equifax and TransUnion.
  • Rental Kharma– Initially, Rental Kharma costs $50, then $8.95 each month, while reporting payments to TransUnion.
  • CreditMyRent– This service costs $14.95 per month with additional charges if you want past rent reported. It reports payments to Equifax and TransUnion. 
  • PaymentReport– With a $49 enrollment fee, you get two years of rental payments sent to Equifax and TransUnion.

Along with the services listed above, there are a few that tenants can use for free, as long as your landlord is signed up. Talk with your landlord or Baltimore property management company to see if any of these services are available to you. Once you’ve found a service that works with your budget and credit goals, make sure to report payments and build credit by paying rent. 

Tips for Building Credit While Renting

Building credit while renting can be hard. If you’re working towards getting a mortgage loan, but you don’t have a way to build your credit, it can be difficult to qualify when the time comes. Luckily, there are a few ways you can build credit while renting. 


For instance, you can: 

  • Pay your credit card bill on time each month. 
  • Limit numerous hard credit inquiries, as they can reflect poorly on your credit report. 
  • Pay your utility bills on time and report all rental payments to credit bureaus. 

How Can Property Management Help Your Rental Business?

If you have a rental business and find it hard to screen tenants, collect rent payments, perform maintenance, and run other aspects of your business each day, you’re not alone. Luckily, hiring rental property management makes being a landlord a bit more simple. 

Bay Property Management Group has the knowledge and expertise to maximize your rental portfolio. Contact BMG today if you need rental management services in Baltimore, Philadelphia, Northern Virginia, or Washington DC.