Does Paying Rent Late Bring Your Credit Score Down?

In the past, late rental payments didn't have much effect on an individual's credit rating unless the landlord sent the unpaid rent to collections. In 2011, however, Experian changed its reporting policies to include rental payment information. Because Experian is one of the three major credit bureaus, failing to make your rent payments on time could lower your credit score.

Background

Before Experian's changes, late rental payments only appeared on an individual's credit report if the landlord subscribed to a credit bureau's services, which was typically too expensive for most small management companies or individual property owners. If a landlord did report rental payments, credit bureaus didn't give them the same weight as other debts because rent payments reflect an individual's ability to prepay for services rather than repay a debt.

RentBureau

To accurately report rental payment information, Experian uses information from RentBureau. According to an Experian press release, Experian acquired RentBureau's multifamily division in 2010. RentBureau is the most commonly utilized credit reporting agency among landlords and management companies. It consists of a national network of property companies that collect information about rental payments and report them to the central database each day. Subscribing property managers use the information RentBureau provides to determine a potential tenant's creditworthiness.

Experian

In 2011, Experian began including rental payment data on credit reports. During 2011, Experian will only include positive payment data. However, in 2012, Experian will report negative payment data as well. If a renter is late making his monthly payment, the delinquency will appear on his credit report and may lower his score. At the time of publication, Experian is the only one of the three major credit bureaus that plans to report rental data.

Considerations

Though, at the time of publication, late rental payments only affect Experian credit reports, the other two major credit bureaus may follow suit in the future. Unpaid rent may also appear on any of your credit reports as a collections account if your landlord sells your debt to a collection agency or obtains a judgment against you.