Standard wisdom (unless you listen to the people hawking cell phones at the mall) is that paying rent, utilities, or cell phones does nothing for your credit. No debt is being taken on, and so no credit is established. But that’s a pretty large check you write every month to pay rent on your Dallas apartment, shouldn’t it be building credit? In many cases, it can – but you have to be proactive about it. You also need to consider who it’s building credit with, and whether anyone will care about that information more than the other things on the report.
PRBC – Limited Value
There’s a company that offers a product called PRBC, or Pay Rent Build Credit. They factor rent payments on your apartment into an “alternative credit score.” It piqued our interest when we first saw the product some years ago, but then we realized the big question:
Care to explain what an “alternative credit score” is, who uses it, or why it does you any good? The company is a bit cagey about who, if anyone, might grant you credit based on such a thing. Plus, your landlord has to verify it. You also need to add several other bills to it if you want to build credit by paying rent, so it’s not a great choice if you have roommates and the rent is paid by you, but the electric is in their name, for instance.
For what it’s worth, we reached out directly to PRBC for comment on the utility of their serve, and here is the response that they sent:
Tyler – Thank you for your email
PRBC collaborates with a lot of Companies and with the PRBC alternative score obtained you can apply for a loan with any Lender you chose.
According to the Equal Credit Opportunity Act, if you present a business with proof of alternative payment history, they must consider it when making a decision as whether to give you credit.
Customers have been approved for loans and purchases using PRBC at furniture stores, auto dealers, jewelry stores, banks, and other lenders. PRBC has also been used to get approved for apartment leases.
In other words, it appears to be your responsibility to present the lender with your PRBC alternative score, and up to them how they factor it into the credit decision. It will probably be only minimally. Maybe a car lot that “totes the note” would give it more weight, but a landlord isn’t likely to (he can verify that you paid rent with your last landlord) an apartment complex certainly won’t (their scoring models don’t allow for it) and so on. Their reference to the Equal Credit Opportunity Act appears to be smoke and mirrors. A lender must only consider “information the applicant may present that tends to indicate the credit history being considered by the creditor does not accurately reflect the applicant’s creditworthiness.”
In other words, you may present information that says your FICO score doesn’t accurately represent your credit history. The amount of weight that a lender gives to that information is up to them. We do give them “credit” for a quick response, but there may be more efficient ways to use your rent payment to impact your credit, and certainly to impact your credit score.
One of the Big Three bureaus, having rental payment data on your history with them would be useful. But it’s hardly as easy as calling them up and saying “Please believe that I’ve always paid my rent on time, and put it on my credit report.” They’ll only accept that information from your landlord. The information filters through from Experian RentBureau, which is a separate product used by landlords for rental payment history. It’s unknown if there’s a lead time on it making it to your credit report or your FICO score.
You can also opt-in by using a rent payment service that reports to Experian RentBureau. These include ClearNow, RentTrack, and PayYourRent. We have no direct experience with any of these services, but you will, of course do your due diligence. If you use a rent payment service, make sure they’re directly connected with your landlord. You want to avoid having the service mail a check to your landlord, because that comes with all of the risks of, well, mailing a check yourself along with the added possibility of an issue on their end.
They’re a rent payment service. Your landlord doesn’t have to verify past rent payments when you sign up – you do. You can do that with cancelled checks, bank statements, and other similar documentation that proves that you made the payment timely. Your landlord may participate if he likes, and he can verify payments each month going forward. Reports are made to TransUnion.
In no cases that we’re aware of will rent factor into a FICO score. It’s just not built into the model. The newer VantageScore models used by TransUnion and Equifax do have a place in their model for it, however. The amount of impact on your score may vary based on what else is on your credit report, and just like any consumer reporting the system is far from perfect. But you might as well get some benefit out of it since you’re going to pay the rent on your Dallas apartment anyway.
If you’re renting in Dallas, you need to be protected from risk, as well – if you’re trying to build credit, you’d likely be in no position to replace everything you own if it were lost to a fire, a theft, or something else. That’s where renters insurance comes in. Starting at around fifteen dollars a month, it’s the most affordable way to protect yourself. To find out more, just call (800)892-4308 or click to get covered - whether you need Dallas renters insurance quotes online or coverage anywhere else!
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