Renters who need to build their credit histories are getting a leg up from a major consumer credit reporting agency.
Experian is now incorporating rental-payment history data from its recently acquired RentBureau unit into its traditional credit file, which it says will make it easier for college students, recent graduates and immigrants to boost their credit scores — if they pay their rent on time. Typically, credit reports include payment history on credit cards, mortgages, retail accounts, installment loans and finance company accounts.
Experian’s move comes at a good time, with the U.S. homeowner rate falling to its lowest level since 1998. It was 66.5 percent in the fourth quarter, according to the U.S. Census Bureau. That’s 0.7 percentage points lower than the fourth quarter of 2009 and 0.4 percentage points lower than the rate in the third quarter of 2010. The last time it was below the current level was in the fourth quarter of 1998, census data shows.
Still, there are limitations. RentBureau’s database receives rental payment histories every 24 hours from property managers, but currently includes only 8 million residents nationwide.
Last June, Experian acquired RentBureau, and, last month, started incorporating its data into its traditional consumer credit reports.
It’s “one more thing that lenders, landlords, insurance agents and even employers can learn about you,” said Bill Hardekopf, chief executive of LowCards.com, a credit-card comparison Web site. “This could be great news for renters who dream of owning their own home.”
Experian claims to be the first and only major credit reporting agency to include residential rental payment data in credit reports.
Chicago-based TransUnion, through one of its subsidiaries, collects rental payment data and supplies it to landlords with credit information to help them screen potential tenants. But, at this time, rental payment history on the basic credit file for routine credit inquiries is not available from TransUnion, spokesman David Blumberg said.
“TransUnion has always been a leader in using alternative data sources, like utilities data, to help provide a clearer picture of an individual’s credit history and help unbanked individuals to gain access to the credit they deserve,” Blumberg added. “TransUnion currently uses this information in all of its proprietary scoring models. “