Adulting is hard. We all know it. And one of the hardest parts is figuring out how to get out of the trap of not yet being established.
You’ve probably all been frustrated to find an entry-level job posting that requires experience. Or maybe you’ve filled out a rental application for your first apartment that asks for references.
One of the most daunting documents of the adult world, though, is the notorious credit report. Most people will tell you to get a credit card to establish credit. But what if you don’t qualify for one yet, or want to manage your spending another way?
Luckily, there are alternatives to credit cards to grow your credit history. One of the best things you can do is build credit through rent reporting.
This may sound complicated, but it’s not. Indeed, it’s a simple process that you can complete quickly and then get back to making your rented space a home. Read on to learn more about how to improve your credit by reporting your rent payments.
How to build credit with rent reporting
Rent reporting arose from a simple fact. While mortgage payments appear on your credit report, rent payments do not. And rent is the largest monthly expense for many people trying to build credit
If you’re trying to build credit to qualify for a mortgage or other major loan, reporting your rent payments to credit bureaus can help establish you as a reliable candidate for lenders. This can help both renters and landlords. In fact, one study found that two-thirds of renters would prefer a property with rent reporting already in place.
You can’t report rent to credit bureaus directly. However, if your landlord doesn’t already use rent reporters, you do have other options.
You can use one of many rent reporting services available to help establish your credit and boost your credentials as a real adult.
Questions to ask rent reporting services
The next step you’ll need to take is to do your research! There are many services available, but they aren’t all equal. Here are a few questions you’ll want to be sure and ask:
Do you require landlord verification?
Some rent reporting companies require your landlord to verify your payments before they will report them. If that’s the case, you’ll want to speak with your landlord to see if this is something they can do.
Which major credit bureaus do you report to?
There are 3 major credit bureaus: Equifax, Experian, and TransUnion. Ideally, the service will report to all of them.
What does it cost?
Some services charge you a one-time enrollment fee, monthly reporting fees, or both. Sometimes these fees are charged to the landlord, especially if they are already enrolled. Other services have tiered offerings, with some less expensive or even free options.
This might be worth it to you in interest savings on a future loan. Make sure you understand the cost of their services, as well as cancellation policies.
Next steps for building credit
If you plan to add rent to credit report requests, you may benefit from other resources to build credit as a young adult. Check out the Landlord Credit Bureau blog for other tips, tricks, and insights on rent reporting and other helpful steps you can take.