Late rent payments could be added to your Experian credit report

Traditionally rental payments have not been a part of the major credit reporting agencies. Consumers who paid rent late did not have to worry about a ding added to their credit reports, until now.

In June 2010, Experian, one of the largest consumer credit reporting agencies acquired RentBureau. RentBureau was established in 2005. They developed a National Rental Data Exchange (NRDE) database and system.

The system stores rental payment history, rental collection data and lease applications on approximately 8 million of the nation’s 38 million rental units according to the Los Angeles Times.

Reporting rental payments may have a positive effect on consumers with little to no credit history such as students, recent college graduates and immigrants. It may help consumers with slight credit files to build a credit history.

If you pay rent on time your credit score could experience an increase. No longer will consumers have to depend solely on credit card accounts, mortgage, personal and auto loans for credit building information.

However, there is the huge potential it will hurt consumers who do not pay rent on time. You may even find it harder to rent in the future if negative rental information becomes part of your credit file.

For now, the credit reporting will only affect Experian’s VantageScore credit score. It is likely in the future rental payments will be incorporated more widely into all credit reporting and scoring.

If you are not paying your rent on time you may be okay at this time as Experian may not even have your rent information. According to the National Multi-Housing Council, a trade group for major landlords, the 8 million renters in Experian RentBureau database represent just a slice of the nation’s 96 million renters.

One group of consumer most likely to benefit from this new credit reporting will be young people. New legislation has made it more difficult for younger people to obtain credit cards. Young people who rent and make timely payments will find it easier to get credit cards and installment loans.

Another group likely to benefit is consumers who have faithfully paid their rent on time. Previously there was no credit score benefit to paying rent on time, now there may be.

Vice present and managing director of Experian RentBureau, Brannan Johnston said “Given that one-third of the U.S. population rents, we felt it was imperative to reflect the true creditworthiness of those individuals who responsibly pay their rent.”