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Q: I’m thinking about moving out of my parents’ house and into an apartment. Will this rental payment help my credit at all?
A: It might. Many landlords do not report rental payments to the credit bureaus, but more are starting to. Recently, Experian started including rental data in their credit reports. Hopefully the other bureaus follow this trend. Since not all landlords report this information, that may be something you want to ask when searching for an apartment.
Renting an apartment can always affect you negatively if you don’t pay money that you owe. If you are several months behind, or if you leave the apartment damaged beyond what your security deposit will cover, your landlord may send that information to collections, which can hurt your credit.
Even if your landlord doesn’t report to Experian, paying your rent on time may help you. Some lenders are willing to give mortgages to those with limited credit histories, as long as you have a solid (2 to 3 year) history of paying your rent on time, as well as a steady income.
With the recent backlash against out of control spending, Americans are moving away from the way credit has been handled in the past. We may soon see some changes, hopefully starting with Equifax and TransUnion including rental payments on their credit reports. Until then, you may want to build credit by getting a credit card and using it responsibly.