How Do Timely Rental Payments Affect a Credit Score?

Credit scores are generally based on information that is reported to credit bureaus. While it is rare that a landlord or property management company reports rent payment history to a credit bureau, the consequences of not paying rent on time can end up on credit and tenant screening reports.

Credit Reporting

In order to report accounts to credit bureaus, a creditor must be a client of the credit bureau. This is an expensive undertaking, and simply isn't cost-effective for most landlords or property management companies, according to Maxine Sweet, Vice President of Public Affairs at Experian. As a result, on-time rental payments are not reported to credit bureaus and do not affect your credit score.

Collections and Evictions

While on-time rent payments are usually not reported to credit bureaus, some negative aspects of your rental history may end up on your credit report. For example, evictions and court judgments are a matter of public record and credit bureaus do monitor this information for inclusion on credit reports. In addition, some landlords may not choose to sue for any money still owed them, but may send the account to a collection agency that does report to credit bureaus.

Tenant Screening

Many landlords and property managers check references as well as credit reports when considering a tenant application. By paying your rent on time, you can help ensure that your landlord will give you a positive reference. In some cases, a good reference from a previous landlord can compensate for a spotty credit report.