A Way for People With Low Credit Scores to Raise Them
A new study finds that tenants who pay their rent on time can see "significant increases" if the payments are reported to credit bureaus. People who pay their rent on time can establish credit scores or significantly raise low scores if the payments are reported to credit bureaus, new research found.
A study published this month by the Urban Institute, a think tank in Washington, D.C., looked at two groups of tenants recruited in 2021 and 2022. The members of one group began having their rent payments reported to credit bureaus immediately after signing up to participate in a program offered by their properties. The members of the other group had their rent reporting delayed by four months.
“Traditionally, rent hasn’t been included on credit reports because it isn’t considered debt. And in the past, it was challenging to have rent reported to credit bureaus.” said Dara Duguay, chief executive of Credit Builders Alliance, which helps nonprofit housing providers adopt rent reporting and was a participant in the study. Housing groups and landlords, she said, typically had to go through a time-consuming process to become qualified to submit data to the bureaus.