A striking number of renters are still confused about what’s included in their credit reports, according to a new study from the credit bureau TransUnion.
According to the survey, 48 percent of renters think their rental payments are automatically added to their reports. More than half — 54 percent — think their utility payments are also regularly reported. Meanwhile, just over 50 percent mistakenly think their cellphone and cable/Internet payments show up on their reports as well.
On-time utility payments typically aren’t reported. Neither are cellphone or cable payments. Instead, most reports only include traditional credit information, such as whether you paid your credit cards or mortgage on time. When nontraditional items, such as utility payments, do make it onto a credit report, it’s usually bad news for consumers’ credit: It’s due to an unpaid debt being sent to a collection agency.
Rental payments — including the on-time ones that help build credit — are a different story. They’re starting to become included in credit reports, with both positive and negative information included. Two out of three of the nation’s biggest credit bureaus —
Experian and TransUnion — accept at least some rental payments into credit reports.
It’s far from universal, though. TransUnion spokesman Ken Chaplin told Money magazine most landlords still don’t bother to participate.
The push for change
With some consumer advocates urging them on, TransUnion and Experian have embraced the idea of including alternative data regularly on people’s reports. Experian, for example, first began including rental data in its credit reports back in 2010 and has been advocating for the use of rental payment data since.
TransUnion has also been pushing for rental data to be regularly included. “Expanding the share of property managers who report rental payments will produce more accurate information that truly reflects how consistently consumers meet their financial obligations,” said Chaplin in an Oct. 21 news release. “It will benefit renters who want to help their credit scores and landlords who want to attract renters who pay rent on-time.”
Earlier this summer, TransUnion released a study showing an overwhelming number of consumers with bad credit would see a significant increase in their credit scores if their landlords reported their payment data to the credit bureaus. The credit bureau also introduced a new reporting platform designed to make it easier for landlords to report their tenants’ payment histories. But so far, most landlords haven’t signed on.
A number of people have been pushing for utility, cable and cellphone payments to be included as well. But they’ve also had a hard time getting their movement off the ground.
Last summer, a bipartisan group of legislators reintroduced the “Credit Access and Inclusion Act,” which is designed to promote the inclusion of nontraditional data in credit scores, to the U.S. .House of Representatives. It was introduced but failed in the previous session. A bipartisan group of senators later introduced a Senate version as well. But both versions of the bill have been languishing in committee since and show few signs of getting revived any time soon.
Proponents say including nontraditional data, such as utility and rental payments, will help consumers substantially improve their credit scores. That’s especially true for consumers who don’t have much credit history or who currently have a low credit score because of a fluke event, such as an extended hospital stay. However, detractors worry some people — including renters who legally withheld rent in a dispute with their landlord — will be inadvertently harmed if nontraditional information is included.
What you can do
If you want your noncredit related payment information included in your credit reports, you may be able to ask for it.
For example, you can ask your landlord if they’d be willing to sign up directly for a credit bureau’s reporting service. Or you can request to pay your rent online through a rental payment service such as ClearNow, williampaid, RentTrack, RentalKharma, RentReporters or PayYourRent — all of which report your payments to one or more bureaus.
You can also sign up with a nontraditional credit reporting service, such as PRBC, and ask your lender to consider it. These services track your everyday bill payments, such as your cellphone or cable bill payments, and create a specialized report. But this information won’t show up on your traditional credit reports and so it may not help you if your lender isn’t willing to look beyond your regular scores.