Rent payment history isn't reported to credit bureaus unless tenants pay extra
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Most renters pay $1,000-$3,000/month reliably for years, but this payment history is invisible to credit scoring models unless they opt into a third-party reporting service that charges $5-$10/month. Mortgage payments are automatically reported by lenders at no cost to borrowers. This means the single largest monthly expense for 44 million American renter households does nothing to build credit, while homeowners get credit-building as a free side effect of their housing payment. For renters trying to eventually buy a home, this is a Catch-22: you can't build the credit needed for a mortgage because you're renting, and you're renting because you can't get a mortgage. This persists because credit bureaus' business model depends on data from lenders (who pay to report), and landlords have zero incentive to report rent payments since it costs them money and effort with no benefit to their business.
Evidence
A 2022 CFPB study found that including rent payments in credit scoring would improve scores for 60% of renters, with the largest gains for those with thin credit files. Only about 2% of the 44 million renter households in the U.S. have their rent reported to credit bureaus, per a 2023 Experian estimate. Services like Boom, RentTrack, and Piñata charge $2-$10/month. The FHFA announced a pilot program in 2022 to include rent in Fannie Mae's underwriting, but as of 2024 it remains optional and rarely used by lenders.