Positive rent-payment data has powerful credit-score impact

Experian, one of the three national credit reporting companies (CRCs), recently released a study, “Credit for Renting,” which demonstrates the powerful effect that positive rent-payment data can have on the credit scores of subsidized-housing tenants.

Experian used its RentBureau database to identify nearly 20,000 subsidized-housing residents with consistent on-time payments on rental leases established between 1994 and 2013. The study simulated the addition of that payment data to the consumers’ credit files, and looked at the consequences, including impact on VantageScore 3.0 credit scores. (VantageScore credit scoring models consider rental-payment data, when it is present in a consumer’s credit file.)

Among the study’s findings:

“Adding on-time rental payments to credit files may help those who operate primarily on a cash basis to integrate into the banking system and establish a credit history that they can leverage to receive more affordable credit and improve their economic well-being,” said Brannan Johnston, vice president and managing director of Experian RentBureau.

“Consumer financing rapidly changed during the economic upheaval, and regulatory changes forced lenders to tighten the standards for the underwriting process. This excluded many Americans from the opportunity to attain credit due to a limited or no credit history,” said Genevieve Juillard, president of Experian Consumer Information Services. “For the last decade, Experian has advocated for full-file reporting and invested in new sources of data outside the traditional sets, such as Experian RentBureau, to help expand credit files. Residents who pay their rent on time, month after month, should be rewarded and not overlooked simply because they rent instead of own the place they call home.”

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