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Question By
isthisnametaken

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Building Credit through Renting
Hi,

I have heard there are ways to build credit by paying consistently one's rent on time. I know of at least one company -- it's called Rental Karma -- that is trying to make this work. It certainly makes sense to me intuitively. Can anyone comment on this?

Thanks,

Mike

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Rental Kharma Will Not Improve Scores

Helpful to 8 out of 11 people

Currently Experian is the only one of the three big national credit bureaus which incorporates on-time rental payment data into its credit reports. Experian started recording positive rental history through Experian RentBureau in 2010. At this time, Equifax and TransUnion do not include rental payment data in their credit reports at all.

According to Emily Christiansen, director for Experian RentBureau, in an interview with Angela Cooley of Realtor.com, your rental history “may be incorporated into certain credit scores, such as VantageScore and Experian’s PLUS Score”. (VantageScore a competitor to the widely used FICO credit score). So, having your timely rental payments reported to Equifax “could” boost your EXPERIAN credit score.

Experian’s positive rental payment history reporting will not, however, have any effect on your FICO score. The New York Times reported in its February 2014 article “Paying the Rent on Time Can Enhance Your Credit Report” that Anthony Sprauve, senior consumer credit specialist with FICO, said that FICO does not include rental information in the formula for its flagship credit score. So, if you are working with a lender which bases its credit decisions solely on your FICO score, your rental history will be irrelevant; and if the lender uses Equifax or Transunion instead of Experian, it will not be part of the credit report at all. Currently, the only the rental payment service providers working with Experian RentBureau: are ClearNOW, RENTRACK, and PayYourRent.

Rental Kharma does not report to any of the three big credit bureaus, Experian, Equifax and Transunion. According to Bill Butler, co-founder of Rental Kharma, in that same February 2014 New York Times article, “Rental Kharma helps consumers report up to two years of rental payment history to MicroBilt Corportation.” Microbilt is not a credit bureau. MicroBilt provides online access to consumer and commercial credit bureau data which bills itself as a single source for consumer credit reports from PRBC, Equifax, Experian and TransUnion.

In short, using Rental Kharma will not improve your FICO Score and your rental history will not be reported to Experian, Equifax or TransUnion if you use Rental Kharma. Unless a lender uses Microbilt Corporation as its source for credit reports, any reporting done to Rental Kharma will never be seen by a lender, landlord or employer who runs your credit report.

Reply by
FactJunkie

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Helpful to 6 out of 7 people

Update:

TransUnion has also begun incorporating verified rental payment data into credit files where it can be included in the computation of consumers' scores when they apply for a mortgage.

TransUnion has introduced a “ResidentCredit” service that encourages rental-property managers to report monthly payment information for their tenants and allows property managers with 100 or more units to report directly for free.  TransUnion will structure all ResidentCredit rental lease accounts as “open” portfolio accounts. This approach captures the amounts of your last rent payment and your next payment due, and allows you to develop a payment pattern showing your monthly payment history. TransUnion found that reporting rental payment information to the credit bureaus in a manner similar to other financial obligations MAY have a positive effect on your credit. While scoring models vary, consumers who pay rent on time will generally experience a neutral to positive change to their credit score. Late payments will likely see negative score movements. As stated above, it will not effect the FICO Score.

Reply by
canhascredit

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Wow, you certainly live up to your namesake - that's super useful to know! Thanks FJ :)

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It does work

Helpful to 1 out of 1 people

Hey I found this thread after searching to see if there were other services I could use that report to more than just Transunion. 

I paid RentalKharma to add 20 months of rental history to my credit report and my score went up +9 points. I am in the mid 700's as a point of reference so may have more impact for someone with a lower score but that is major boost for me and think it's worth every penny. 

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Helpful to 1 out of 1 people

I had really good results from RentReporters went from a 640 to 800 credit score in 8 months.  They are also having a promo $20 off with code TMUK

It was an easy process and the results helped me get a loan with a lower rate.

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Most Helpful Response

Rental Kharma Doesn't Work

Helpful to 5 out of 5 people

I paid the $30 about 8 months ago, got my landlord to sign off on all the documents, and it didn't help my credit score by even 1 point. 

Reply by
isthisnametaken

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Helpful to 2 out of 2 people

That's disappointing to hear. I went ahead and tried it and got all my documents in about 2 months ago. Still no change in my score so far. I'll report back if I see a bump. Thanks for the feedback though.

Have you called them and let them know that? I'd be curious their response. This is the fundamental premise of their whole company, and if it's faulty.....

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Helpful to 6 out of 7 people

The problem is that very few rental companies report payments to the credit bureaus.  But I've seen hundreds of credit reports and I have never seen any apartment/rentals show up on any of them.  The only time I've seen them show up is if someone moves out an owes them money, then it appears as a collection account.  I understand that the rental community may have their own systems to check on someone's rental history, but if it doesn't show up on your credit report, then it is not used as part of your credit score.  Same thing with utility companies, they don't report your good payments, but will report collection accounts.  Hardly fair, but then, what's new?

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Rental Kharma Is a Sham!

Helpful to 3 out of 4 people

As a customer, I believe that Rental Kharma is totaly incompetent and unreliable. I have worked with Bill Butler, the Rental Kharma employee who wrote the message above, since August, 2014. I paid them $45 to report my rental payment history for the past 12 months to Trans Union as well as ongoing monthly updates. To my my surprise, Bill informed me in October, 2014, that my rental transaction was among the first transactions to be successfully submitted to TransUnion. Bill led my to believe that Rental Kharma has fully operational processes capable in delivering the performance that Rental Kharma boasts about.

Rental Kharma failed to update my credit file with the 12 months history that my landlord provided and caused my credit score to drop. In addition, Rental Kharma failed to update my credit file going forward. On December 11, I requested a refund of my $45. They finally issued the refund after a second request. I also requested that they remove the transaction from Trans Union that caused my credit score to drop. They have not responded to this request. It has been over 45 days and they have not corrected my credit record with Trans Union.

Do not do business with Rental Kharma. They will only frustrate you and harm your credit standing. They are not able to deliver what they advertised.

I have emails between Bill Butler and myself to support my claim of their incompetence.

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i wish they would

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Helpful to 0 out of 1 people

I've been hearing about services that now do/can add your good rent payment history into the big 3 Credit Bureaus. Is this true/is there a cost/ can this now be possible? i tried contacting a company called www.rentKharma.com but they were very sketchy-seeming and I was afraid it was a scam.

thanks

troid

Spokesperson
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Rental Kharma on Credit Reports

Helpful to 1 out of 6 people

As an employee of Rental Kharma I wanted to let everyone know that Rental Kharma does work.

Many of our members use Credit Karma and they have sent us screenshots of their Rental Kharma rental history on their Credit Karma account.

Some of our members have seen up to 20 months of past rental payment added.

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