How and Why You Should Report Rent Payments to Credit Bureaus

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Reporting rent payments to credit bureaus seems more for the tenant's benefit than it is for landlords like you. For one thing, tenants that report can improve their credit history and score, so they're more likely to get approved for a mortgage, car loan, or lower interest rate.

Are there any advantages or compelling reasons for landlords to report rent payments to major credit bureaus? Turns out, there are. Read on to learn the six reasons you should start reporting rent payments today, and how you can get started as soon as possible.

Why You Should Report Rent Payments to Credit Bureaus

Here are six reasons why landlords like you should report rent payments to credit bureaus:

1. Easier Screening Process

Reporting rent payments makes it easier to screen applicants who want to rent from you, as credit bureaus compile rental payment histories, and landlords can access this information quickly. A positive record (where results show payment of rent on time) means the tenant is trustworthy, while a negative one indicates that an applicant isn't reliable.

2. Reduced Risk of Nonpayment

By reporting your tenants' rent payments, you can show potential lenders that your renters are good at paying their debts on time. Transparency provides added protection in case a tenant fails to make their rent payment, as there's now proof they have a history of regularly paying debts on time.

3. Higher Quality of Tenants

Reporting rent payment history can help you attract higher quality renters because people who want to rent your property and know that their payment history is being tracked are more likely to pay on time and take better care of your rental property.

4. Higher Rents

Payment reporting gives tenants with good credit scores an easier time getting approved for rental properties, which then allows you to charge more in rent than what you can get from someone with a lower credit score. Not only do higher rents bring in extra revenue, they also reduce tenant turnover costs since good tenants are less likely to move out quickly.

5. Easier Access to Capital

Reporting payments helps show creditors that landlords are reliable and responsible in managing their finances. This increased credibility can open up access to more capital for future projects, such as buying another rental property or taking out a loan on a larger

piece of land.

6. Improved Reputation

Reporting rent payments to credit bureaus also helps landlords build their reputation in the industry. As tenants improve their credit scores and lenders view you as a credible business, other investors may be more likely to trust your judgment when investing in real estate with you.

How You Can Report Rent Payments to Credit Bureaus

Reporting rent payments benefit both landlords and tenants. To ensure that both parties get access to the advantages associated with this process, consider using a third-party reporting service. With the right solution, it’s easy to start tracking tenant payment histories and improve your reputation in the industry.

For example, you can use third-party services like RentReporters, which provide an easy way to submit and track tenant payment histories. All you have to do is sign up, enter basic details about your tenants and their rental payment information, and submit the report to the credit bureau.

The tenant can see their credit report within three months of submission.

Can You Report Rent Payments Manually?

Yes, it’s possible to report rent payments manually but it’s a complicated and time-consuming process. You’ll need to collect rent payment data from each tenant individually, process the information manually, and then submit it to the credit bureau yourself.

Here are the steps:

1. 1. Collect tenant data: Provide the tenants’ names, complete addresses, current phone numbers, and rental history information.
2. 2. Prepare the documents: Put together any supporting documents that you need to back up the tenant’s claim of timely payments (rental agreement, receipts, etc.).
3. 3. Submit to the credit bureau: Gather and submit all the required documentation to the credit bureau for processing. Of course, answer any questions the bureau will have as well.
4. 4. Monitor payment history: Once it’s all done, keep track of tenants' rent payment activities to ensure accuracy in reporting their history to credit bureaus.

However, if you're a property investor looking to expand your business opportunities and portfolio, we recommend that you consider reporting rental payments via third-party solutions instead of doing it manually. Property management companies take care of the above reporting steps on your behalf.

Landlords can either include credit reporting as part of the lease agreement (whether they choose to cover the costs or not), or they can leave it up to the tenant to decide. Based on our experience, we hope that you consider offering credit reporting regardless of whether the tenant brings it up, or not.

Report Rent Payments to Credit Bureaus for More Advantages

Reporting rent payments isn't just beneficial for tenants—landlords like yourself can reap the rewards too, by improving tenant screening processes, reducing the risk of nonpayment, and gaining access to extra capital. Plus, if done right, credit reporting can help you attract higher-quality tenants, increase rental rates, and improve your reputation in the industry.

So, why wait? Start reporting payments to credit bureaus today!

If you need more help with managing your rental properties, get in touch with me today. I run a team of expert property managers in Metro Detroit, and I’m always happy to connect with clients via email to share tips.