Reporting Rent Payment to Credit Bureau

[David M.]

Hello,

I have a young couple renting from me who is interested in possibly buying the home at the end of our lease next fall. However, they have little credit. I've considered setting up a system to report late payments/on-time payments in the past as an added incentive to be timely with rent payments, but I never got around to it. This seems like a good time to investigate the process, however.

Does anyone report rent payments to the credit bureaus? If so, what's the process like, and what are the pitfalls that I'm not anticipating?

Thanks in advance.

[Joel Owens]

Ask for the area what credit agency is looked at by the lenders??

For example in my area a local bank only looks at Equifax. So if the rent built credit history through Trans Union it wouldn't matter as the bank would not consider it for a loan. Now some lenders will lend just off of one credit reporting agency or take the middle of the three etc.

Do not put all your success on these renters buying your property. Very few times do they actually end up buying the property. Even if credit does improve they might buy something else  at the end of the lease term. If with the option the value of the property has gone up they might have equity built up with the purchase in a year. If you charge them market rates in a year they might seek a deal elsewhere when they can purchase.