A new TransUnion analysis found that the reporting of rental payment information to the credit bureaus in a manner similar to other financial obligations could have a positive effect for the majority of subprime consumers’ credit.Learn more
Approximately 8 in 10 subprime consumers experienced an increase in their VantageScore® 2.0 credit score one month into their new apartment lease.
TransUnion's research also compared the credit score impact of being a first-time homebuyer (where the mortgage payment is reported to the credit bureaus) versus being a renter (where the apartment rental payment is not reported).
First-time home buyers in early 2012 experienced a 5.2% increase in their credit score over the next year.
The average renter saw a slight decline (-0.4%) in credit score during this same timeframe.
“Following the mortgage crisis during the last recession, home ownership rates have declined to 20-year lows as many consumers choose to rent. In fact, there are now 40 million American renter households in 2013, which is up nearly 5 million since 2007.
Despite millions more renters, most rental payment histories are not provided to credit bureaus, and renters looking to improve their credit standing cannot do so. To that end, TransUnion is introducing ResidentCredit, a newly-expanded service that encourages property managers to report the payment performance of their apartment residents.”
—Tim Martin, Executive Vice President at TransUnion