Has your credit score dipped below 601? That could make applying for a loan or credit card difficult. Fortunately, we have a simple fix for you: Pay rent online, and you’ll soon see that credit score go up. In one study, renters who included their rent payments to credit bureaus saw an average credit score increase of 16 points within six months. Those with a credit score below 620 saw the greatest benefit.
When you pay rent online, you’re making a simple action that could pay off big. Let’s discuss how credit bureaus determine credit scores, how to report your payment history, and how to build a credit history.
How Do Credit Bureaus Determine Credit Scores?
First of all, it may come as a surprise to you that you have more than one credit score. Your score will vary depending on who you ask. “Credit scores will vary for several reasons, including the company providing the score, the data on which the score is based, and the method of calculating the score,” explains Equifax. In general, though, credit bureaus look at the same components:
- Number/types of accounts
- Used credit vs. available credit
- Length of credit history
- Payment history
When you pay rent online, you are able to supply the bureaus with two of the above components: credit history and payment history.
How Do I Get My Payment History to the Credit Bureaus?
Just buying things does not create a payment history. Your payments need to be recorded and reported. “Simply paying your rent will not help you build credit,” says Bev O’Shea at NerdWallet. “But reporting your rent payments can help you build credit—especially if you are new to credit or do not have a lot of experience using it.”
That doesn’t mean you need to call the credit bureaus every time you pay your rent. At West Fifth, we take care of the reporting for you. When you use our online rental payment system and pay rent online, your payment is reported to the credit bureaus directly. In order to opt in for the credit reporting, follow these steps:
- Log in to your account through the resident portal and click on “Make a Payment Now.”
- Select “Build your credit history by opting in to credit reporting.”
- Enter your information in the credit reporting fields. Be sure to select “yes” for month-to-month lease if you have one, or select “no” and a lease end date.
How Do I Build a Credit History?
Many of us have been conditioned to think of credit cards as dangerous debt traps. However, that’s not necessarily the case. Credit bureaus need to know that we can use them responsibly, and online rent payments are a great, safe way to do it. “Open a credit card and use it to pay your rent . . . then pay your credit card balance in full each month,” says LaToya Irby, credit expert for The Balance. “The timely credit card payments will help boost your credit score.”
Ready to improve your credit score? Now that you know how credit bureaus determine credit scores, how to report your payment history, and how to build a credit history, you should be set to pay rent online. Use our resident portal and start today!