Can Renting Improve Your Credit Score?

By: ROS Team

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Searching for the perfect apartment or house to rent can be the most exciting period. Unfortunately, that happiness can be affected by your credit score, especially if the numbers aren’t satisfactory. When you apply to rent an apartment or a house, the landlord will want to see evidence that you can afford to pay the rent and pay it on time. Depending on your credit score, you can get approved or denied for the rental property you’re interested in. On the other hand, if you struggle with having a bad credit score, renting can help you improve it.

When renting, some people choose to guarantee their payment using a credit letter. The bank guarantees that the specific payment will be done in time, so the other party, such as the landlord, doesn’t have to worry. Click on the link to learn more about a letter of credit and how it works.

What is a Credit Score?

When making a lending or leasing decision, you must present your credit score. It’s a three-digit number that’s created based on your credit history.

Five Factors Determine Your Credit Score:

  • Payment History: This is 35% of the credit score and shows whether you can make your credit payments on time.
  • Owed Accounts: This contains 30% of the credit score, including the amount of money you owe to your loans and credit cards.
  • Average Age of Credit: This factor accounts for 15%.
  • New Credit: Refers to recent checks on your credit report, making up 10% of the credit score.
  • Credit Mix: Determined by the type of credit account, this factor takes up the last 10% of your credit score.

Depending on these factors, your credit score can be good or low. Unfortunately, you might be considered risky if you have a low credit score. Rent payments are not included in credit reports, but most landlords look them up to protect themselves from further troubles.

How to Check Your Credit Score Before Renting?

Before you start apartment or house hunting, it’s important to know your credit score. Although there isn’t a set credit score to rent, getting approved depends on the location, landlord, and property.

The credit score is ranked according to the FICO Score model, a specific type of score used by lenders when making decisions.

Depending on the FICO Score, your credit score can be:

  • Very Poor: 300-759
  • Fair: 580-669
  • Good: 670-739
  • Very Good: 740-799
  • Exceptional: 800-850

You can rent out anywhere you want with an exceptional credit score. Yet, the most important thing to remember before doing anything is to get your score and see what you can do with it. If you have a bad score, there are always ways to improve it, which we will discuss later in the article.

Can Renting Improve Your Credit Score?

Paying your rent on time won’t help you build credit, but reporting that payment can raise your credit score. The best way to report it is by using a rent-reposting service, which requires a fee. Once you sign up with legal services, you can pay the rent directly through them, and the amount will be redirected to your landlord. Each monthly transaction will be reported to the credit bureaus, thus improving your credit score.

There are two ways to report your on-time rent payments, and both options have huge potential to help you without opening a new line of credit.

  • Past Payment Reporting: You’ll increase your credit score by reporting past rent payments for at least two years. This option is extremely helpful for those who have no credit history.
  • Ongoing Rent Payment Reposting: Reporting the rent your currently paying will prove your financial trustworthiness.

How to Choose a Rent Reporting Service?

You need to enroll with a rent reporting service to do everything correctly. It’s the best way to improve your credit score and keep track of your rent payment. But how to choose the best rent-reporting service that will aid you in your mission of improving your credit score?

Discuss The Service With Your Landlord

You start searching for a service and discuss it with your landlord to see whether they have enrolled in a rent reporting service. You can reduce your fees if your landlord already works with a service. If they’re unfamiliar with it, ensure they’ll accept participating and accepting the rental payment through the service. Explain to them how this can benefit your credit score and improve it in the long run.

Do a Proper Research

When choosing a proper service, consider how much the service will cost and how many credit bureaus will receive your rental payment history. Make sure that chosen service reports to the three credit bureaus because that’s the only thing that will raise your credit score.

Confirm That Your Landlord Will Receive Your Payment Through the Service

Once you’ve paid through the service, they will subtract their fee and send your landlord the exact amount of money to cover the rent. Ensure you give out the correct information about your landlord to set up the payment process correctly.

Aks For a Credit Report to Confirm That Your Payment Has Been Noted

Before asking for a report, wait at least 30 days. That’s how long it takes for the service to report your payment to the credit bureau. You can also contact the service to find out how long it may take for your payment to show up in the credit report.

Does Missing a Rental Payment Affect Your Credit Score?

It can happen to anyone to be late or miss a rental payment. Most people working on improving their credit score wonder whether this affects them negatively. This depends on whether you and your landlord are users of a rent-reporting service. If your landlord is not using a service, they won’t be able to report the missing rental payment, so your credit score will not suffer.

If your landlord uses a rent reporting service, they can report the missing payment. Unfortunately, once it’s reported, that information will go to the credit bureau and show up in your credit report. Your payment history will have a negative mark, and your credit score will most likely go down.

Is It Possible To Rent With a Low Credit Score?

If you always pay your rent on time, your payments will be registered in the credit bureau, and your credit score will slowly improve. This means that even if your credit score is low now, renting the apartment you want is possible and can eventually boost your credit score.

If you need a roof over your head as soon as possible, there are ways to demonstrate that you’re a great renter.

Show a Proof of Your Previous Rental Payments

If you have always paid your rent your time, get a document to prove it, check images, or a bank statement. Showing that you’ve always made the payment on time can make the landlord reconsider, even if your credit score is low.

Provide a Letter Of Recommendation

Ask your previous landlord to describe how great of a tenant you were and that you always paid your rent on time. A proper letter of recommendation might end up selling the deal for you. If you have never rented an apartment, you can ask your employer for a recommendation.

Give a Proof of Savings

Your income doesn’t indicate how much money you have, meaning your net worth can be much higher. If your credit score is low, but you have a large amount of savings in your bank account, use it as proof to get the apartment. Many landlords will accept your rental proposal if they’re assured that you have enough money in the bank.

Get a Lease Guarantor

A lease cosigner can help you rent, even if you have a low credit score. This person will sign the lease with you to assure your landlord that he won’t experience any financial trouble. Remember that your cosigner must have a good credit score, and he can get into trouble if you don’t pay your rent on time.

Offer The Landlord to Pay More Money Up Front

If you have a good budget, offer the landlord to pay the security deposit upfront and more than the first month’s rent. Don’t give this offer if you don’t have the money!

Go Month-to-Month or Ask For a Shorter Lease

Some landlords will be more willing to let you rent if you agree to these terms. The landlord can easily replace you if you don’t pay, so they’ll be more protected.


Building good credit is always a great idea, so why not start while renting? Do your research and choose a proper rent reporting service to track your on-time rental payments and report them to the credit bureaus. It might sound like a small step towards improving, but it can be significant, especially if you struggle with having a low credit score. Lastly, don’t skip your rental payment because that will appear in your credit history.