After filing bankruptcy and receiving your discharge of debt, it’s easy to put it behind you and enjoy a fresh start without collectors emailing and calling and texting constantly looking for payment towards old debts. However, it’s smart to take a moment and make a plan to repair your credit, so you aren’t impeded by a low credit score later. One question many ask is whether on-time rent payments will be enough to repair their credit.
Can On-Time Rent Payments Improve Your Credit Score?
If you are making on-time rent payments, it’s possible they could have a positive effect on your credit score, but it’s also possible that they will not be considered at all. Here’s a breakdown of how and why. The three major credit bureaus (Equifax, Experian, and TransUnion) include rent payment info in credit reports if they receive the data. Those credit reports created by the three major credit bureaus provide the data that goes into credit scores. There are two major credit scoring companies (FICO and VantageScore). These two vary in their handling of rent payment info. The most widely used FICO score doesn’t use rental payment information in calculating scores. Newer versions (FICO 9 and FICO 10) do consider rental payment information if it is included in a credit report. VantageScore also considers rental payment information.
Why Isn’t Your On-Time Rental History Being Reported?
While the credit reporting agencies include rental payment info in the data used by FICO and VantageScore to create credit scores – they only do so if they receive a report of the payment history. You can’t report rental payments to the credit bureaus yourself. So, who does report it?
How to Get Your On-Time Rental History Reported to the Credit Bureaus:
For some, reporting on tie rent payments is taken care of because the landlord has a rent-reporting service. If your landlord doesn’t use a rent-reporting service, you can work one yourself, but you’ll be charged a fee (often over $100 per year). If you choose to go down this road, determine which credit bureaus the rent-reporting service will report to, and which credit scores will take that info into account.
While working with a rent-reporting service is an option, it may not be the most cost-effective method of rebuilding credit after bankruptcy.
Rebuilding Your Credit Post-Bankruptcy:
Other strategies to build credit may be a more efficient choice than rent reporting because they are more all-inclusive: they influence all types of credit scores and usually report to all three of the major credit bureaus. When rebuilding your credit after a Tennessee or Georgia bankruptcy, we suggest considering becoming an authorized user on someone’s else credit card and benefiting from their good credit history, obtaining a secured credit card (which requires a deposit that serves as your credit limit), or seeking a credit-builder loan (sometimes available through local credit unions or community banks – loan payments are reported to the credit bureaus, but you only get access to the funds after you pay the loan off). You can also try to get your utility payments reported to your credit report (consider services like Experian Boost or eCredable).
If you have questions about filing Tennessee or Georgia bankruptcy, or you need to know how to rebuild your credit after filing bankruptcy, contact an experienced bankruptcy attorney. Don’t hesitate to call Kenneth C. Rannick, P.C., Tennessee, and Georgia bankruptcy attorney. We help good people through bad times.