Building credit and maintaining a good credit score is an integral part of life. After all, you need good credit to get a mortgage, student loans, car loans, and more. Without a good credit score, it can be difficult to get these things. Luckily, there are several ways you can build credit, including paying rent on time. Keep reading to learn why you should report rent to all 3 credit bureaus.
Why Should You Report Rent to All 3 Credit Bureaus?
According to a study by TransUnion, the majority of renters want their landlords to report rent to all 3 credit bureaus–TransUnion, Experian, and Equifax. When you report rent payments, renters can build their credit much faster.
Aside from tenants’ building credit, landlords also have several benefits. For example, landlords often find that tenants pay rent on time more often than not if payments are reported to credit bureaus. Along with that, it increases transparency between past renters and prospective tenants.
Next, let’s go over the statistics of rent reporting and why Gen Z is all for it.
Surveys Show Gen Z Wants Rent Reported–Here’s Why
In April 2022, TransUnion surveyed how landlords, property managers, and tenants stand on rent reporting. It turns out that only 27% of property managers aware of credit reporting were doing it.
2,389 participants were included in the survey regarding including rental payment history in credit reports. As a result, the following answers were provided based on 350 rental property managers and 2,039 tenants.
- 70% of respondents agree that they would consider reporting rent if it meant fewer late rent payments and less chance of eviction.
- 50% of landlords say that rent reporting attracts higher-quality, more financially responsible tenants.
- Only 15% of tenants have their rent payments reported to credit bureaus.
- Around 30% of Gen Z renters have their payments reported to credit bureaus.
- 70% of renters who report payments notice their credit score improves significantly.
- 60% of tenants under the age of 30 wish to have payments reported.
- 77% of renters say they would be more likely to pay rent on time if they knew it could impact their credit score.
Overall, it seems as though reporting rent payments could be a win-win for tenants, landlords, and property managers.
Since the majority of renters today are Gen Z, there’s a bigger push for landlords to report rent to all 3 credit bureaus. After all, who doesn’t want to improve their credit score? In addition, when you report payments, you can help more people gain credit access, which can benefit renters.
As such, if you’re a landlord or property manager, there are several good reasons to report rent payments. First, around 73% of landlords don’t do it, so it’s also a great way to set yourself apart from the competition. Here’s how you can report rent payments.
How Can Landlords Report Rent Payments to Credit Bureaus
Tenants are unable to report rent payments themselves. Instead, landlords or property managers can report them using a management app or a third-party rent reporting service. For instance, rental managers can report information directly to the credit bureau.
Additionally, there are several platforms for tenants to use for a fee, including:
- Rent Reporters- This service has a one-time enrollment fee of $94.94 and includes up to two years of rental payments. It reports them to TransUnion and Equifax.
- Level Credit- You can send rental payments to Equifax and TransUnion for a monthly fee of $6.95.
- Rental Kharma- Once you pay a one-time fee of $50, you can report payments to TransUnion for $8.95 per month.
- Payment Report- After you pay a $49 enrollment fee, you get two years of reporting to Equifax and TransUnion.
Some platforms are free for tenants to use, as long as your landlord is signed up for them. If you’re unsure whether or not they are, reach out to your rental property management team in Baltimore to see if they’re available. Then, if you find a service that works with your budget, make sure to report rent payments and start building credit.
Benefits of Reporting Payments to All 3 Credit Bureaus
Upon hearing about how reporting payments work, many renters are interested in doing so. That said, there are several benefits for both landlords and tenants. Here are some of the main advantages to consider.
- Collect Rent Payments on Time
- Fill Vacancies Faster
- Encourages Online Payments
- Tenants Can Boost Credit Scores
Collect Rent Payments on Time
One of the greatest benefits of reporting rent is on-time payments. One of the hardest parts of rent collection is getting the money in on time. So, anything to encourage tenants to pay on time is always a bonus for landlords. Additionally, you can attract more reliable renters if they know payments can affect their credit score.
Fill Vacancies Faster
Since not many landlords offer rent reporting, it can set you apart from the competition, allowing you to fill vacancies faster. For instance, if a prospective tenant is deciding between two similar apartments, but you offer rent reporting to all three credit bureaus. In that case, they’re more likely to choose you over another landlord.
According to some studies, 70% of tenants would rather live in a rental that reports rent payments than one that doesn’t. As such, rental reporting can fill vacancies quicker and ensure happier tenants, landlords, and property managers.
Encourages Online Payments
Reporting payments is a great way to encourage tenants to pay their rent with online services. Not only is it more accessible, but it can assist with reporting payments. For instance, if you use an app to pay rent, you can set up recurring payments, and landlords can block partial payments.
However, it’s crucial to keep in mind that PayPal and Venmo are not the best ways to pay online. It’s best to have a dedicated rental payment app that incorporates rent reporting.
Tenants Can Boost Credit Score
Many tenants and prospective renters like the idea of rent reporting because it allows them an easy way to boost their credit score. After all, rent is likely one of the most common recurring payments, and it must be paid each month either way. So, why not benefit from it?
According to a study by Yahoo! Money, reporting rent payments can boost a score by 60 points. Ultimately, that means a tenant can go from a poor credit score to a good score just by paying rent. With a higher score, your tenants have a bit more leverage, making it easier to pay rent.
Leave It to Professional Property Management
If you own a multi-property rental company, managing every aspect is difficult. For example, keeping track of rent payments for each property, screening new tenants, performing maintenance, and more are hard for one landlord to do. As a result, many rental business owners opt for a high-quality property management team like Bay Property Management Group.
BMG offers comprehensive rental management services so that you can focus on other aspects of your business. Contact us today if you need services in Baltimore, Philadelphia, Northern Virginia, and Washington DC.