How to Show Your Rent Payments on Your Credit Score

Rent is the biggest monthly expense for most Americans, and tenants can use on-time payments to improve their credit scores. But they can’t do it alone.

“It would be wonderful to see it eventually evolve into rent payments, which automatically makes credit reports,” said Sara Rathner, credit analyst at NerdWallet. “This is something I would love to see because I think so many people would benefit from it. But for now, you have to use a third-party service.”

These third-party services include special credit cards that tenants use to pay rent or apps that report rent payments to credit bureaus. But Rathner says many of these third-party services require a start-up fee or a monthly subscription, unless an owner agrees to cover the cost.

However, one company, Piñata, offers a one-of-a-kind program that is free for tenants. The company provides the service for free by working with companies that offer rewards on the app while tenants are accumulating credit.

“For us, it’s really about helping people with lower to average credit scores, as well as lean credit records,” said Lily Liu, CEO and Co-Founder of Piñata.

Liu says Piñata is no magic bullet for a bad credit score. It would take time from rent payments alone to recoup the big hits of bad credit.

“One of the big risks that we always want to remind tenants is that reporting rent is only a small aspect of your total credit score,” Liu said. “It is important to look at the other major expenses of life.”

Rathner says it’s also important to remember that anything can increase a credit score, just like anything can hurt a credit score.

“Obviously if you ever have a late rent payment it can hurt you. It’s like paying any other late bill,” she said. “It may show up on your credit report and may temporarily affect your credit.”

Rathner also recommends that with any rent declaration service, users first consider what will happen if they cancel due to a move or if a user is in conflict with a landlord. Piñata allows users to cancel at any time for any reason.

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