Does Late Rent Affect Credit Score?
How Does Late Rent Payment Affect Credit Score?
When it comes to their creditworthiness, tenants can be wondering if they have any payment history; for example, if they paid rent a few days late. Indeed, credit reporting companies compile information on loan and mortgage payment timeliness; why then should rent payments not be included?
The quick response is that your credit score is probably not going to suffer from late rent payment. That does not imply, however, that you are absolutely out of the woods. These are some things you need to know about how renting could damage your credit.
The important element that has to be underlined is the fact that credit reports exclude rent payments.
The three main credit bureaus, Experian, TransUnion, and Equifax, compile information on the payment records of many accounts including mortgages, credit cards, and auto loans. Of the many elements that comprise a credit score, your payment record for each different product reveals your payment pattern.
This does not apply to rent paid to your landlords, whose records are not shared with any of the agencies. This suggests that, should you pay your rent a week late, your credit record will not show any negative influence not to mention your score.
Tardiness In Payment Of Rent Can Trigger Other Effects
Although paying rent a few days late would not harm your credit score, you should avoid starting the pattern of late payment of rent. First, your landlord could penalize you for missing deadlines for paying rent. The details of your lease will establish whether these costs are imposed and when they are payable.
Paying rent late might also cause your living condition to become challenged. Should they consistently be late, their landlord may opt to call for their eviction. Once you have been evicted, the difficulties of searching for a new house will make it difficult for you to be evicted once again. Two of the most often used procedures by landlords evaluating tenant applications are credit checks and tenancy history.
Learning How to Build Credit as a Renter
If you want to build credit but don't have access to tradelines like mortgages or auto loans, there are still ways to establish and strengthen your score.
- Get a credit card: Credit cards enable one to establish a credit history of timely and responsible credit usage in the long run. It will be wise to ensure that you clear your balance in full at the end of the month. Such factors as high balance and delayed payments will lower your score.
- Become an authorized user: If you have a family member or friend with good credit, you can ask him or her to include you as an authorized user of one of their credit cards. The positive payment history of their accounts will be reported to your credit reports.
- Use alternative data: Some of the financial technology firms are enabling renters to choose to have their timely payments reported to credit bureaus. For instance, Experian Boost enables you to include a positive payment history from utilities, streaming, and rental services to your Experian credit report.
- Check for errors: People make errors, therefore it is important to check your credit reports periodically to see to it that there are no wrong things that put your score down low. It’s good to get negative items removed because it can help to improve your score.
The Bottom Line
For now at least, if you can pay your rent a little bit late you don’t have to worry about that being reported on your credit. However, it can cost you in other ways such as eviction or even struggle to find another house to rent. Also, it is crucial to build good credit even when one does not own a house or has not bought a car yet. There are choices such as credit cards or reporting programs that can help you establish your score. It will help you to be ready when you are out looking for a new apartment or when you want to be a homeowner.
Ready to boost your credit score? Call +1 888-804-0104 now for the best credit repair services near you! Our expert team is here to help you achieve financial freedom and improve your credit. Don't wait—get started today!