Does Paying Rent Build Credit?

Paying rent can help you build credit. However, it will only do so if your rent payment is reported to credit bureaus. Otherwise, rent payments typically won’t appear on your credit report or affect your credit score.

Let’s explore how rent reporting works, its benefits and what to consider before signing up for a rent-reporting program.

How to report rent payments to credit bureaus

Rent payments are not automatically reported to credit bureaus in most cases. However, all three major credit bureaus, Experian, Equifax and TransUnion, will include rent information if they receive it from a rent-reporting service.

You generally have two options:

• Landlord or property management reporting: Some landlords may use rent-reporting services to share tenant payment data
• Tenant reporting: If your landlord doesn’t report rent payments, you can sign up for a third-party rent-reporting service

To enroll in a rent-reporting service, you’ll usually need to provide proof of your lease, payment records and your landlord’s contact information. Once verified, the service can report your on-time rent payments and help you build a strong credit history.

Rent reporting services may charge a small monthly or setup fee, so it’s a good idea to compare options and confirm which bureaus receive your information before enrolling.

How paying rent can build or hurt credit

When reported, on-time rent payments can help boost your credit by demonstrating consistent payment history, a major factor in your credit score. However, because reported rent payments will also affect your payment history, late or missed rent payments can hurt your score if they’re reported.

Why payment history matters

Payment history typically makes up a significant portion of your credit score. Consistent, on-time rent payments reported to credit bureaus can show that you’re a dependable borrower. Missed or late payments, however, can stay on your credit report for up to seven years.

Tips for managing rent payments responsibly

If you’re using a rent-reporting service, these steps can help you protect and grow your credit:

• Set up automatic payments to help you avoid missing due dates
• Create reminders on your phone or calendar for upcoming rent payments
• Review your budget regularly to help ensure you can make payments comfortably
• Choose rent-reporting services that may offer flexible options to help reduce the chance of negative impact, such as grace periods or only report positive payments

Additional benefits of rent reporting

Beyond helping you build credit, rent reporting can offer other advantages:

• A strong rent payment record may improve your chances of lease approval for future leases
• Landlords may view positive rental history as a sign of reliability, potentially offering favorable lease terms or lower deposits

Is reporting rent worth it?

Ultimately, the value of reported rent payments depends on your situation. Reporting rent payments may be helpful if you’re building or rebuilding credit. Consistent rent reporting may also help to support a positive credit score for those with established credit.

When choosing a rent-reporting service, you should generally confirm which credit bureaus receive your information and stay current with your payments. These steps can help you make the most of your rental history and strengthen your creditworthiness.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.