Here’s how rent can make or break your credit, experts say

Rent payments don’t typically affect your credit — but they can in a few circumstances. The consequences can be significant.

Rent doesn’t show up in your credit history, experts say because landlords don’t usually report payments to credit bureaus as credit card issuers and other lenders do.

When rent payments do appear, it’s generally because a tenant — or a property manager on a tenant’s behalf — has enrolled in a so-called rent reporting program. These services are meant to provide tenants with the opportunity to grow their credit history through on-time rent payments.

“The good news is that there are a lot of them out there,” said Matt Schulz, chief credit analyst at LendingTree. “It’s certainly been a growing space over the last few years.”

If you fall behind, however, those services can also hurt your credit, experts say. And whether you report your rent to the bureaus or not, debt collection efforts for late or unfulfilled rent payments can also be a black mark on your credit.

The Consumer Financial Protection Bureau began accepting complaints about rental debt collection in August 2023. Since then, there have been roughly 10,960 consumer complaints about rental debt collection in the U.S., per CFPB data through Feb. 21.

If you’re a renter or plan to be, here’s what you should know. 

Rent reporting can especially help those who are “credit invisible” or do not have any credit history. If you’re looking for ways to grow your credit, such platforms can be a helpful tool.

Those who have enrolled typically see their credit scores increase. When rent payments are included in credit reports, consumers see an average growth of 60 points to their credit score, according to a 2021 TransUnion report.

But if you fall behind on your rent payments, that activity could be also reflected in such tools, and in turn, your score, experts say.

What’s more, rent reporting services are not always free and do not always report the data to all three major credit bureaus, experts say. For example, rent reporting platform Rental Kharma charges $8.95 a month after an initial setup fee of $75. The service reports the data to two of the three bureaus: TransUnion and Equifax. 

Even if you don’t use a rent reporting service, your landlord has the ability to report late or unpaid rents to the credit bureaus via a debt collection service, said Chi Chi Wu, a senior attorney at the National Consumer Law Center, a nonprofit headquartered in Boston. 

Rent delinquencies sometimes appear in credit reports if a tenant leaves a unit and the landlord claims the tenant owes back rent or damages, she said. The landlord in this situation will then send that amount to a debt collector.

The addition of any paid or unpaid collections tradeline — amounts of allegedly past-due accounts appearing on consumer credit…