Attention anyone trying to either build credit, or repair credit! Paying your rent and utilities through platforms like RentMoola can help you do just that. RentMoola allows users to sign up for free and pay their rent or one time payments online with their credit card, and by doing so you’re able to build your credit, by doing something you’d be doing anyways but seeing no rewards for it!
Two recent studies found a way to capitalize on a previously untapped source of positive payment history: those rent and utility payment checks that everyone writes each month!
The utility of paying your utilities (and rent!)
Until recently, paying your rent and utilities on time did nothing for your credit report and saw no rewards for it, leaving many consumers in the cold.
“For many Americans, financial exclusion is a reality,” said Emily Christiansen, director of Experian Rent Bureau. She pointed out that even though many of these Americans consistently meet their financial obligations, they have little to no credit history because they operate primarily on a cash basis, which shuts them out of mainstream financial services products.
To see what impact including this information would have on consumers, Experian added payment history for a select group with thin or no-credit profiles.
According to Experian’s “Let There Be Light” study, adding positive utility payments yielded the following results:
- A nearly 50% drop in subprime consumers with credit scores between 300 and 600
- A 54% increase in consumers considered nonprime with credit scores between 601 and 660
- A 15% increase in those with credit scores over 661, generally considered prime
When positive rent payment information was added, the number of consumers designated as subprime dropped nearly 20%, according to Experian’s “Credit For Renting” study.
The study also found adding rental payments helped consumers with limited credit history. Before the study was conducted, 11% of the renters had no credit file or score. After the information was added, those renters were considered scorable and able to start building on their positive credit histories.
However, that means you have to actually pay on time
Missing rent payments or being delinquent on utility bills might cause your credit scores to take a hit, so it’s very important to budget accordingly and make sure that the money will be in your account when these payments are due.
The good still outweighs the bad in these scenarios, according to Chris Magnotti, strategic analytic consultant at Experian. Names, people with no credit history will still be able to build their tradelines and develop a credit score.
Now, go get your report updated
It’s important to know that RentMoola does not connect directly to any credit bureau, so it’s the renter’s responsibility to keep track of how their credit scores are doing. This sort of information can be easily tracked through your bank.
Getting your utilities to report may take some follow-through. Typically, a utility company will report your payment history if requested, but the company may report only once. If you want your information reported more often, you may have to make the request again.
But when you’re trying to get out of the credit doghouse, a short phone call might just be worth the extra effort.
It’s really a no brainer, if you’re paying rent and utilities every month regardless, why not get rewarded for it by improving your credit score? And good credit, though important, isn’t the only way you can benefit from paying rent with RentMoola. You’ll gain access to our ever-growing list of MoolaPerks, which gives you deals and discounts to local companies and services that our members love! Sign up free or login to learn more about MoolaPerks and how you can get in on the action.