Experian adding renter history to credit scores calculations
Credit score bureau Experian is now including renter history in its formula for adding up credit scores. Previously, only negative marks on a renter’s history, like evictions from non-payment, were added. Now positive marks will be added.
Pay the rent on time and do some credit repair
Credit bureaus typically do not factor renter’s history when calculating credit scores, except when things go horribly wrong. Paying rent on time doesn’t get noticed by credit agencies even if “the rent is too damn high” as Jimmy McMillan astutely observed. However, eviction for financial reasons is reported. The credit bureau Experian is going to start adding rental activity to its score formula, according to CNN. That will include rent payments, whereas only mortgage payments were previously included in calculating a credit score. Now a person only needs to pay rent on time to do a little credit repair.
Participation unfortunately limited
Rental history being reported to credit bureaus would be fantastic for many people, as it would mean a positive history is established before trying to get a loan for a home or a car. However, participation is going to be limited for some time. Experian’s RentBureau unit is only getting reports from 45 rental property management companies and info on eight million renters so far. Unfortunately, college students from Arizona to Alabama and beyond might not be improving their scores by being responsible. Those interested to know should contact their landlords to find out if they report to Experian or request a credit report from Experian.
New rules for credit scores
Credit bureaus have new rules to abide by because of the Dodd Frank Act and the Fair Credit Reporting Act, which alter the rules for credit disclosure, according to the Wall Street Journal. A person applying for an installment loan has the right to know what their credit score is. However, the laws don’t mandate that loan lenders disclose which credit bureau’s score was used. However, one free annual credit report from Experian, Equifax and TransUnion can be requested through AnnualCreditReport.com.