As a tenant, do you ever think about where you might go the next time you move?

Maybe you will settle into a similar apartment, or upgrade to a bigger or nicer place. Or if you can afford a down payment and secure a good mortgage, maybe you will become a first-time homebuyer.

Whatever your future holds, the world will open many more doors for you if you have a strong credit history—in other words, a documented track record of borrowing money responsibly and paying your bills on time. But if you are a young student, new to the country, or trying to rebuild your history after a fallen credit score, your credit record may be a little on the thin side.

It Pays to Boost Your Credit Score

With a healthier credit record and a higher credit score, you may qualify for low interest rates—on credit cards, mortgages, car loans, lines of credit and more—and money-saving deals on insurance products, Internet services and cellphone plans. And not only can you save cash, but any prospective employers or future landlords who check your credit score are more likely to hire you or accept you as a new tenant.

Do you want to improve your credit report? And do you pay your monthly rent on time, every time?

If so, you will be pleased to discover that paying your rent on time can increase your credit score.

You Pay Rent on Time—You Deserve Credit

You might know that homeowners establish credit by paying off their mortgage debt on time. This is because mortgage lenders report the payments to credit bureaus.

If you are like many tenants, you dedicate 30% to 40% of your monthly income to your rent. And now, just as a solid credit file can help you secure a rental unit, paying your rent punctually once you get in can help you grow your credit score still further.

But your rent does not get reported automatically. Your landlord or property manager needs to report your payments to Equifax through the Landlord Credit Bureau (LCB).

When your landlord reports your on-time rent payments, you can improve your credit report and help repair any poor credit history.

You can also build a positive tenant record that will come in handy when it comes time to hunt for your next apartment—especially if you live in a city with a particularly competitive rental market. If you take good care of your unit, your landlord or property manager can update that information in your record.

When you apply for a new place, your prospective new landlord will be able to access your record and see proof that you are a conscientious, low-risk tenant. If you end up competing for the apartment with other applicants whose record (if they even have one) shows unpaid rent or damage to their units, your untarnished file may work in your favor.

How to Get Your Landlord to Report Your On-Time Rent Payments

To get started and begin monitoring your tenant record, create your own free LCB account and invite your landlord to join.

Why would your landlord come on board? Landlords want to reward responsible tenants and provide incentives for them to stay. If one of the tenants in your building fails to pay rent, the lost income costs your landlord $11,000 on average. By reporting rent payments (or non-payments) to Equifax through LCB, landlords reduce their risk of losing out on rental income.

How Else Can You Build Your Credit Profile?

With so many factors contributing to a high credit score, you cannot rely on your rent payments alone to strengthen your credit record. Here are 5 more ways to build or rebuild your credit history.

1. Use Less Than 35% of Your Credit Limit

For example, if you have a credit card with a $1,000 limit, try to use no more than $350 each month. If you need to use more, you might ask your lender for a limit increase.

2. Keep Unused Credit Card Accounts Open

Holding on to old accounts increases both your credit history and your total amount of available credit (as opposed to the portion you use), both of which may raise your score. However, if an unused account is relatively new, if it has an expensive annual fee, or if you are trying to control your spending, closing the account may be a smarter choice.

3. Mix It Up

Lenders like to see you can reliably handle multiple types of loans. Use different types of credit, such as credit cards, car loans, lines of credit and mortgages. Just be sure you pay off all your debts on them responsibly.

4. Limit Your Applications for New Credit

Applying for a credit card, a loan, a cellphone account or some other form of new credit usually generates a hard inquiry. When different lenders or creditors make hard inquiries for your credit file around the same time, your score may take a short-term hit and the inquiries may stay on your credit report for up to two years.

5. Look for More Ways to Improve

Follow our tips to build your credit even without a credit card. These include improving your payment habits, getting a credit card alternative, finding a loan you can qualify for without credit, and staying on top of your credit report.

Are you ready to improve your credit, build a positive tenant record, skip the line and get the rental unit or home you deserve? Sign up today to report your on-time rent payments.

Disclaimer

The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

In October 2021, the LCB organization re-branded some of the services it offers under FrontLobby. Until this point, the LCB organization has consisted of two companies handling different services under the umbrella trademark of Landlord Credit Bureau. The introduction of FrontLobby enables each company to maximize its focus and impact. Read More