With 44.8 million U.S. renter households in 2022, it's clear that tracking rental payments can benefit tenants and housing providers alike. Rent reporting is not standard practice and it’s not something that happens automatically, likely because many housing providers don't know that it's an option. While high-volume housing providers can report rent payments directly to the three main credit bureaus, one of the most effective ways of ensuring rent payments get reported to credit bureaus is to use a third-party rent reporting service.
Tenants can find managing multiple bills challenging. Rent reporting has multiple benefits for tenants and housing providers, so it's helpful to understand how it works.
Rent reporting enables organizations (including housing providers, fintechs, financial institutions and more) to report any rent payments your consumers are paying to credit bureaus, benefiting you and your tenants.
How?
Rent reporting helps your consumers establish their credit score and build positive credit history.
If you've never heard of rent reporting or have been hesitant to try it, you may need some help figuring out how it works.
One important point to remember is that you cannot report your rent payments to credit bureaus on your own — you need to use a third-party service to do this. Using reliable rent reporting services ensures these payments are accurately and fairly reported. Whether you're a residential homeowner renting out your property, a property manager involved in financial decision-making or a financial institution looking to better serve your consumers, you can reap the benefits of rent reporting.
So, why should you use a service that allows you to report your renters’ rent payments? Rent reporting can help build a better relationship between your organization and your renters, lowering the risk of conflict and giving you one less thing to worry about.
Here are some specific ways rent reporting benefits everyone involved:
01
Financial service organizations
Financial service organizations (fintechs, banks, credit unions, etc.) may find that offering rent reporting services improves customer relationships and increases customer loyalty and engagement. When financial organizations provide rent reporting and other services to support rental businesses, customers are more likely to continue using those institutions rather than taking their business elsewhere.
Financial institutions face increasing pressure to stand out in a crowded market, engage younger customers, and expand their offerings. Many of these younger customers are renters with limited credit histories, making it challenging for them to qualify for products like mortgages, credit cards, or loans. Rent reporting presents an opportunity to address these challenges by enabling customers to build credit through rent payments.
This approach not only positions financial organizations as innovative and customer-focused but also opens doors to cross-sell opportunities, including helping renters transition to homeownership or qualify for other financial products. Additionally, rent reporting can drive customer loyalty, engagement, and acquisition, ultimately supporting broader institutional goals in a competitive marketplace.
02
For housing providers
If tenants know their housing providers are reporting their rent payments to credit bureaus, they're much more likely to pay their rent on time. On-time payments mean you don't need to chase your income or worry about when tenants will pay their rent. Since renters also benefit from this reporting, using these services may increase tenant loyalty. Most leases are for a year, but the longer tenants stay with you, the better.
After all, whenever a tenant leaves, you must find a new one, which takes up valuable time. It can be a tedious process, and if it takes a while, you may lose out on significant income while your property is empty. Happy tenants tend to stay longer, and rent reporting is one way to ensure you satisfy them.
03
For tenants
One of the biggest benefits of reporting rent for tenants is that it can help build their credit score. Whether they need to establish their credit record or improve their scores, this service can help them meet their credit goals. However, there are other pros that tenants can benefit from as well, such as:
Better relationships with their housing providers: Since tenants benefit from rent reporting, knowing that you are willing to invest in services that assist them can help them feel more secure in their relationship with their housing provider.
Easier application for financial services: Rent reporting services allow tenants to prove that they pay their bills on time, which can show financial institutions that they are trustworthy and responsible. Having these records available may make it easier for tenants to receive loans and other financial services.
Easier to rent from other housing providers in the future: Having an established history of on-time rental payments can help tenants become more attractive candidates for future rental agreements with other housing providers.
While it's helpful for everyone to know about rent reporting and the trends that accompany it, it's beneficial for housing providers and other financial decision-makers of companies to know what to expect to make informed decisions. If you're new to this service, learning more about the following trends might be helpful:
Increased use of technology: Technology is constantly advancing, which is excellent for companies as it means many processes can be easier and quicker. The same goes for rent reporting. You can use online tools and software to further streamline your rent reporting process. Some tools may even allow you to add a private label to the component on your website's front end to ensure it fits your brand or embed rent reporting in property management software.
Growing popularity among younger generations: With economic changes, creating a solid credit score can be difficult for those who are newer to the financial world. Many millennials and Gen Zers are turning to rent reporting as a reliable way of boosting their credit scores. Tenants who have their rent reported saw an average 60-point increase in their credit scores, so if you want to appeal to a younger audience, offering a reporting service is an excellent idea.
You might still have some questions about rent reporting, so here are some commonly asked questions:
Does rent reporting improve credit scores? Yes! Rent reporting allows credit bureaus and other financial institutions to see tenants pay their bills on time, thus improving their credibility. Since 4 out of 5 Americans are trying to improve their credit scores, this is excellent news.
Are rent payments automatically reported? No — your rent payments won't be automatically reported unless you use an external service. The only way to ensure the payments are reported is to use a third-party service.
Are rent reporting services expensive and complicated? Usually not. Of course, it depends on which service you use, but most of the time, rent reporting services are reasonably priced and easy to use.
Since you can't report the rent you receive on your own, selecting the right rent reporting service is vital, as you will be entirely reliant on them. You need to know that they are trustworthy, reputable, and knowledgeable.
Look for a service with a solid and lasting partnership with a credit bureau, as these companies are already established as experts in their field. You should also opt for an easily embeddable service that you and your tenants can easily access and use.
At Array, our mission is to help organizations like yours offer in demand consumer fintech products to your consumers. We know that navigating the financial and renting landscape can be challenging, so we try to make things as easy as possible for you and your users.
By integrating our rent reporting into your brand, you create stronger customer relationships, enhance cross-selling opportunities, and differentiate yourself in a competitive market.
If you're ready to take the next step and start offering rent reporting to your consumers, Array can help you, thanks to our BuildCredit™ tool. It's easy to embed, can be front-labeled to match your brand, and has security measures to keep you and your consumers secure.
Request a demo to learn more about what we can offer you.
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Editorial Note: This content is the author’s opinion, expression, and/or recommendation(s).