Does Rent Improve Credit?

Your credit report allows companies to gauge your financial standing and financial worthiness. Information on your credit report can determine whether you are approved for automobile loans, mortgages, credit cards, and apartment rentals. Traditionally, rental history would only affect credit reports negatively; if a renter did not pay rent, outstanding move-out damages or was evicted, landlords could then report this to the credit bureaus, where it would reflect on a credit report as derogatory information. In 2011, this standard practice began to change with a new program introduced by Experian, one of the credit bureaus.

Factors in Credit Score

According to the Fair Isaac Corporation, the company responsible for creating the FICO scoring model for credit reports, your credit score consists of five factors: payment history, length of credit history, amounts owed, new credit and types of credit used. Payment history accounts for 35% of your score and amounts owed counts for 30%. Length of credit history is 15% of your credit score with new credit and types of credit used both accounting for 10% of your score.

Why Rental History Was Not Factored In

All of the information regarding your credit accounts are provided to the three major credit bureaus, Experian, Transunion and Equifax, by your creditors. For example, your credit card company regularly updates the specific information for your account with the three credit bureaus. Landlords have traditionally not had the means or system to provide this type of updated information to the credit bureaus, because credit bureaus have considered rental history to be non-traditional forms of payment history.

Non-Traditional History

Non-traditional history generally refers to your payment history for debt such as utility services, cell phone bills, insurance premiums and apartment rent. Because these are not types of revolving credit line like a credit card or consumer loan, non-traditional history has not typically been included in a consumer's credit file prior to 2011.

How Apartment Rent Can Help Credit

Beginning in 2011, Experian became the first credit bureau to include rent payment history in its credit reports. As your positive rental payment history is reported to Experian, it may have the potential to improve your credit scores. This only applies however, to landlords or management companies that choose to send the information to Experian through a program called Experian RentBureau. You may want to ask your current or prospective landlord if he participates in this program.