Trying to improve your credit score can seem overwhelming, if not impossible. However, it doesn’t always have to be hard. We have some great news: Paying your rent online can help you improve your credit score. According to a TransUnion study from 2017 that studied 12,000 renters who reported their rent payments to credit bureaus for a year, their scores rose an average of 16 points within only six months. Those who benefited most were the renters who started with a credit score below 620.
Consider paying your rent online to improve your credit score. By doing so, you can ensure your payments are reported, combine with credit card payments to increase your score even more, and show credit bureaus what they are looking for. Here’s how it works.
Ensure Your Payments Are Reported
Improving your credit score takes more than just paying your rent. You also need to report your rent payments. According to Bev O’Shea from NerdWallet, “simply paying your rent will not help you build credit. But reporting your rent payments can help you—especially if you are new to credit or do not have a lot of experience using it.”
How can you make sure your rent payments are reported? At Sherwood Apartment Homes, we offer an online rental payment system that reports information to the credit bureaus. With this, credit bureaus can receive a real-time record of your on-time rental payments. This will then contribute to your good credit.
Combine with Credit Card Payments for Higher Score Gains
To boost your score even more, opening a credit card specifically to pay your rent may help.
“Open a credit card and use it to pay your rent . . . then pay your credit card balance in full each month,” says LaToya Irby, credit expert for The Balance. “The timely credit card payments will help boost your credit score.”
While you don’t need to use a credit card to pay your rent, it can be a nice little boost to your credit score, especially if you take the other benefits of paying your rent online into account.
Show Credit Bureaus What They Are Looking For
What even goes into a credit score? And how does paying rent online contribute? Experian, for example, determines credit scores through the following elements:
- Use of credit cards
- Payment history
- Applications for new loans and credit
When you pay rent online, those payments become part of your payment history. As you pay on time and in full and continue to do so, that becomes part of your score, too.
Improve your credit score by paying your rent online through our resident portal. As you do so, your payments are reported to credit bureaus, showing them exactly what they are looking for. Plus, if you choose to pay rent with a credit card, you may increase your score even more. Good luck credit-score-boosting!