Why Report Rent Payments?
Good credit is the cornerstone of financial health.
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Credit impacts many aspects of our lives, including where we live. Building credit requires time and consistency, paying monthly bills reliably and on time. Most renters do just that. Many dedicate around 40% of their monthly income to rent. Unfortunately, they do no not get credit for it, even if they have never missed a payment or paid late.
All of that is about to change. The major credit bureaus now accept rent payment history from landlords and include that history on the individual renter’s consumer credit report. This means you can now add rent to credit reports. This is a game-changer for tenants, who can now see improvement in their credit reports. That unlocks a multitude of savings and benefits, allowing access to the best financing rates and the best amenities. It is no wonder that 68% of renters surveyed would choose a landlord who reports rent payments.
Landlords Who Report Rent See Fewer Delinquencies
Good credit builds over time and requires a mixture of credit accounts. The traditional way to build credit is to take out a credit card, springboard that credit into a car loan, and eventually take the step of securing a long-term mortgage. As credit matures, consumers benefit by qualifying for the best interest rates and financing terms, making it easier to build wealth.
But more tenants today are staying in the rental market, either as a lifestyle choice or because mortgages are more difficult to obtain and housing is becoming more expensive. Over time, those renters fall behind homeowners who benefit from making monthly mortgage payments, forcing tenants into a downward spiral of spending more of their income on interest and fees to access credit lines.
Rent payments, like credit cards and mortgages, only count if they are recorded and tracked by the credit bureaus. Rent is the single largest monthly expense most tenants pay. When tenants report rent payments to credit bureaus, they benefit from building credit faster.
Traditionally, landlords have suffered more than other installment creditors when it comes to enforcing payment contracts. Unlike other businesses where a default is met with suspension of service, the rental industry is heavily regulated. To remove a tenant, a landlord must go through a long and costly legal process. Late payment fees, likewise, are prohibited or limited and are seldom enough to create a deterrent. For some tenants, late fees are comparable to cash advance fees, and they use the lease agreement like an open line of credit.
But landlords who report rent to credit bureaus have an advantage over tenants who might otherwise pay late. Tenants know that as easily as they can build credit each month, late or missing rent payments can tear it down. Those tenants soon may find themselves being passed over or paying more for housing and other necessities.
The landlords who report rent payments through Landlord Credit Bureau currently are enjoying a 36% decrease in delinquencies.
By virtue of managing more conscientious tenants, that also translates into fewer instances of property damage.
What is Landlord Credit Bureau?
Landlord Credit Bureau specializes in reporting rent payments. Rent payment history provided to LCB each month is associated with the tenant’s consumer credit report with Equifax. By providing a turnkey, user-friendly platform specially designed for landlords, LCB makes the process of reporting rent both seamless and affordable. LCB is committed to helping landlords minimize income loss while rewarding responsible tenants by assisting them in gaining the credit they deserve.
The Tenant Record
Along with building credit, tenants whose rent payment history is reported can earn a positive Tenant Record through Landlord Credit Bureau.
Until now, landlords have not been reporting rent payment history, whether that history is positive or negative. As a result, the best tenants who have paid on time every month have no advantage over tenants who have habitually paid late or missed rent payments. When it comes time to fill a vacancy, the new landlord cannot easily distinguish high-risk from low-risk rental applicants.
The Tenant Record provided by Landlord Credit Bureau demonstrates the tenant’s payment history. Tenants can share this positive information with the next landlord to improve the chances of securing preferred housing options. The Tenant Record is a great way to build your tenant credit report.
Why Landlord Credit Bureau
All a tenant needs to do is continue to pay rent on time each month. At the end of the lease, the tenant can access the rental history as a Tenant Record to share with prospective landlords. The tenant not only has an opportunity to earn better credit, but to improve their rental history at the same time. In a tight rental market, that can make it easier to compete with other applicants for the best rental properties.
Focusing solely on landlords and tenants, LCB can offer valuable education and assistance, such as providing sample disclosures that landlords may provide to tenants to explain the benefits of rent reporting. LCB also provides sample lease provisions that allow tenants to better understand their responsibilities under the lease agreement and to maximize the value of rent reporting to build credit.
Once landlords learn how to report rent payments to a credit bureau, they can enjoy enhanced tenant screening abilities like access to the Tenant Records database, the ability to register on tenant credit reports and to report delinquencies to support collection efforts.
Tenants can build credit and rental histories to gain a competitive edge when applying for rental properties, monitor credit reports, and rate their landlords.
Disclaimer
The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.
