Improve credit score by paying rent? Does it work?

May 8, 2018 1:33 PM

There are a couple of apps/websites out there, like pinch and renttrack that claim that if I set up my rent payments to go through them they'll report that to the 3 major credit agencies and that this will likely have a positive impact on my credit. Is this for real?

Having never missed a rent payment for the past 13 years since being on my own, the idea that this could have a positive impact on my credit all this time makes me annoyed, but also eager to reap the benefits. But it also seems, somehow, too good to be true?

Do these services work? Is there a downside to it? Why aren't we all doing this? Am I putting myself at any risk if I sign up for one?

posted by dis_integration to Work & Money (5 answers total)

I haven't done it myself, but here's a good overview from Nerdwallet. Their take: Rent-reporting services may help you establish credit, but there are faster and cheaper ways.
posted by neroli at 1:55 PM on May 8, 2018

One apartment I lived in set up our rent payments this way, basically as a line of credit through the leasing company. I didn't even notice until I ran my credit report and saw that I had a "loan" for $0. I didn't see any significant change in my credit score, and it's mildly annoying now that it still shows on my credit report as a loan that's been paid in full, like my old car note.

You'd probably be better off opening a credit card with $0 annual fee and using it to pay your rent (if your landlord doesn't charge a fee for this) or your utility bill. That will build your history of on time payments and also increase your total amount of open credit, both of which are good. Nerdwallet is a very good resource for building credit; I've gone up 14 points since I started following their advice in February.
posted by assenav at 3:00 PM on May 8, 2018 [2 favorites]

Response by poster: To be clear, I have a credit history, but it could be a *better* one. The promise of these services is that they will improve your credit, but maybe that only works for people without significant credit histories?
posted by dis_integration at 3:42 PM on May 8, 2018

I sat through a "how credit works" seminar recently (a credit union put it on) and they never mentioned this as any kind of option. It seemed to boil down to "if you don't pay your bills and it goes to a collection agency it hurts your credit, but there's no credit bonus to paying rent and bills on time."

I am not a credit expert, but might I suggest going to some financial institution and asking for sure?
posted by jenfullmoon at 6:29 PM on May 8, 2018

Best answer: The co-founders of Pinch are friends of mine and I've heard a lot from them over the last couple of years as they've evolved this business. So from the "are they a scam" perspective, no, they very much are real people trying to do a good thing in recognition of the fact that a huge proportion of post-GenXers (including the two of them) are renting well into their adult lives, past the point that past generations have figured on settling down with a mortgage, and that these renters need to build credit for their adult lives the way you used to with your home loan.

From a "does it work" perspective - the co-founders talked about it a bit on Product Hunt the other day:
"Pinch will make a disproportionate impact on your score if you have little to no credit history (recent immigrants, youth, recent divorcees), but even if your score is ok, it will still make an impact by providing information that's different from a credit card - plus it feels good to finally get something for paying your rent :)" and also, "We're lucky to not have invented rental reporting - it's taken 10 years since the invention for it to become integrated into the major credit scores and all 3 bureaus, I don't know if we could have lasted that long waiting for it to be impactful :) But today it makes a big difference, and so we're the first company making a free offering all three bureaus, and we're the only company doing it from your phone."

If it helps I can ask one of them to answer some specific questions if you have them (or find them on twitter - @maiab and @miradu. They're nice and they DM.)
posted by olinerd at 9:48 AM on May 9, 2018 [1 favorite]