How to make sure your on-time rent payments show up on your credit score

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Posted at 1:21 PM, Dec 21, 2021

Rent is the biggest monthly expense for most Americans, and there are ways renters can use on-time payments to boost their credit scores. But they can't do it alone.

"It would be wonderful to see it evolve eventually into rent payments, making it on to credit reports automatically," said Sara Rathner, a credit analyst at NerdWallet. "That's something that I would love to see because I think so many people would benefit from it. But for now, you do need to use a third-party service."

Those third-party services include special credit cards renters use to pay rent or apps that report rent payments to credit bureaus. But Rathner says many of those third-party services require a startup fee or a monthly subscription rate — unless a landlord agrees to cover the cost.

However, one company, Piñata, offers a first-of-its-kind program that's free to renters. The company provides the service for free by working with businesses that offer rewards on the app while renters build credit.

"For us, it's really about helping people who have lower to mid credit scores; also thin credit files," said Lily Liu, the CEO and co-founder of Piñata.

Liu says Piñata isn't a magic fix for a bad credit score. It would take time for rent payments alone to recover big hits to a poor credit score.

"One of the big risks we always want to remind renters of is that rent reporting is just one small aspect of your total credit score," Liu said. "It's important to look at other major life expenses."

Rathner says it's also important to remember that anything can boost a credit score — just as anything can hurt a credit score.

"Obviously, if you ever have a late rent payment, that can hurt you. It's just kind of like paying any other bill late," she said. "It can appear on your credit report, and it can ding your credit temporarily."

Rathner also recommends that with any rent reporting service, users first look into what will happen if they cancel because of a move or if a user is in dispute with a landlord. Piñata does let users cancel at any time for any reason.