Everyone Wins When Landlords Help Tenants Boost Their Credit Score

Despite the fact that home ownership is becoming unaffordable for an increasing number of people, the economics of residential rentals please no one, regardless of whether it is a mom-and-pop landlord renting out a finished basement or a large company managing a building with hundreds of units.  The rent payments that landlords collect from tenants are barely enough to cover the cost of building maintenance, and tenants struggle to pay the rent, which leads to a situation where everyone complains.  Tenants’ biggest grievance is that, despite all the hard work they do to keep up with the cost of rent payments, the credit reporting bureaus do not give them credit for keeping up with their payments week after week and year after year.  Today, rent reporting services give tenants a boost to their credit score for consistently making their rent payments on time.  To find out more about what landlords can do to make rental arrangements financially beneficial for landlords and tenants, contact a Washington, D.C. real estate lawyer.

How Do Rent Reporting Services Work?

The three credit reporting bureaus, namely Equifax, Experian, and TransUnion keep track of certain payments by consumers and use these as a basis of the consumers’ credit scores.  The payments that count toward your credit score are mostly payments toward loans, such as home mortgage payments, car loan payments, and credit card payments.  In other words, you need to have a high enough credit score to qualify for loans, and then making payments on them increases your credit score even more.

Meanwhile, the bills that most of us pay on a regular basis don’t help our credit scores.  You can pay your rent and utility bills on time every month for years with little boost to your credit score.  Recently, a variety of rent reporting services have appeared.  As their names suggest, they report tenants’ rent payments to the credit reporting bureaus so that tenants can get a boost to their credit score by keeping up with their housing payments, much as homeowners do.

Landlords can choose from rent reporting apps such as Zillow Rental Manager, ClearNow, Esusu, and PayYourRent.  Other rent reporting apps are available by subscription to tenants rather than to landlords.  If you subscribe to a rent reporting service, this can make your rental property more attractive to tenants than other, similarly priced, properties.  Reporting tenants’ rent payments to credit reporting bureaus is a win-win situation.  For tenants, they can increase their creditworthiness more quickly while renting, giving them lower interest rates on personal loans and freeing up more funds to pay down their credit cards or make a down payment on a car.  For landlords, this financial incentive can attract tenants, meaning that the property has fewer vacant units at any given time.

Contact Tobin O’Connor Ewing About Real Estate Ownership in Tough Times

A Washington, D.C. real estate attorney can help you incorporate rent reporting services that benefit your tenants into your business strategy.  Contact Tobin, O’Connor, and Ewing in Washington, D.C. or call 202-362-5900.

Source:

cnbc.com/2024/01/20/how-to-use-rent-reporting-services-to-build-improve-credit.html