TransUnion Study: Only Half of U.S. Consumers Realize Rental Payments Can Be Regularly Reported to Credit Bureaus
A recent TransUnion survey of U.S. consumers who rent their homes found that nearly half (48 percent) of respondents mistakenly believed rental payments are automatically reported to the three national credit reporting companies (CRCs), Equifax, Experian, and TransUnion itself.
The survey findings reveal widespread confusion about which payments are included in a consumer’s credit history.
A majority of respondents also wrongly believe the following payment types are routinely reported to CRCs:
- Cable and Internet fees (53 percent)
- Gas and electric utility fees (54 percent)
- Cell phone bills (52 percent)
At the same time, less than a third (29 percent) correctly identified mortgage payments as data that is regularly reported to CRCs.
“Most consumers report paying rent on-time, but many don’t realize that until now these payments are not boosting their credit histories,” said Ken Chaplin, senior vice president of TransUnion. “Renters should be aware that property managers are starting to report payments to credit bureaus and they should be consistently monitoring what is being registered on their individual report.”
Renters who fail to pay their rent have long been subject to negative consequences for their credit scores. If landlords obtain legal judgments against them or submit their overdue rents to collection agencies, those events appear in the renters’ credit files and adversely affect their credit scores. The VantageScore model is one of few in use in the marketplace that uses positive rental-payment data – giving credit for a pattern of on-time rent payments, provided records of those payments are present in the consumer’s credit file.
TransUnion’s recently announced ResidentCredit product aims to increase the extent to which rental data appears in consumer credit files by simplifying landlords’ reporting of rental payments to the CRCs.
Many renters said including rental payments in calculating credit scores could be a positive development for them.
More than three-quarters (77 percent) of respondents say their credit scores would potentially benefit if rental payments were reported to credit bureaus, compared with reporting cable bill payments (68 percent), cell phone (67 percent), and utility (69 percent). Nearly eight in ten (79 percent) survey respondents said they prioritize rental payments above all other monthly bills.
Rental-payment reporting also provides an important potential benefit for landlords. More than half of renters surveyed (51 percent) also reported they would be more likely to choose a property if they knew their landlord would report their rental payments to credit bureaus.
The online survey includes responses from 1,001 U.S. consumers between the ages of 18 and 64 who are renting the home or apartment in which they currently live. The survey was conducted between September 10, 2014 and September 16, 2014.