Did you know that if your on-time rent payments were reported, it could increase your credit score by more than 40 points?
You can build credit history with rent payments. Ongoing reporting helps establish your good record.
What is the impact of rent reporting on your credit score?
While testing their new credit rent reporting program, Goldman Sachs found the average score of their participants increased by 42 points, going from a credit score of 616 to 658.
This increase put many people on the cusp or over the line of being considered a prime borrower. That opened a lot of credit options.
What was most interesting about the Goldman Sachs program is that the boost was immediate. Compared to other strategies, this rent reporting program was impacting credit instantly while other strategies could take months to show an impact. How did the program generate near instant results? It had to do with the amount of payments added to a person's credit history. The Goldman Sachs program added up to 24 months of back-rental payment history to a person's credit report. This historical data provided a big boost very quickly.
The Benefits of the increase to your credit score
Remember there are multiple sources of credit scores that show up on your credit history, including the FICO Score and the VantageScore.
So what does a 40-point increase to your credit score mean in real-life terms?
- For some, it means having a credit score for the first time, giving them the origin point to build a positive credit history.
- Having a credit history opens up the ability to pay for security deposits, set up utilities, or get a cellphone account. For some they can qualify for credit cards and loans, including a student loan.
- For others who had lower scores the boost can lower the interest rate on many loans, giving them an affordable payment option.
- Credit history can also affect auto insurance premiums.
- And bringing this back around, landlords check credit reports so this boost can affect residents who are renewing their rental agreements or moving to their next home.
How does the program work?
- Service Star will report all rent payments made as a positive entry on your credit report.
- Only if you are past 30-days late paying rent shall Service Star be obligated to report negatively to the credit bureaus.
- Service Star will report to Transunion and Equifax.
- Enrollment fee is $25 per person. Married couples must both be enrolled.
- Ongoing service costs $9.95 per month per person and can be cancelled at the end of your lease term.
Q: I have 2 roommates, do we all need to sign up?
A: No, you do not. With roommates or adult children it is a voluntary sign up. If only one person in the household wishes to participate but the others do not, that is allowable.
Q: My wife and I will be signing up, do the charges apply to us both?
A: Yes, the charges are on a per-person basis.
Q: Does my wife need to sign up if I’m participating?
A: Yes, married couples must both apply or neither parties can participate.
Q: How do I sign up?
A: You should have received an email inviting you to partake in this program. If you have not, or can no longer find it, please reach out to the front desk and she can forward you the link to the enrollment form – (480) 426-9696 x 0.
Q: How soon will my rent be reported?
A: Depending on your enrollment date, please allow 30-60 days for the first payment to be reported to the Bureaus.