What to know

  • Renters in a free rent payment reporting program overseen by mortgage giant Fannie Mae saw an average 40-point jump in their credit score.
  • Rental payments aren't typically reported to the credit bureaus. Some companies offer this service for a fee.
  • Your credit score is a crucial factor in qualifying for a mortgage, with your payment history accounting for about a third of that figure.

A year after Fannie Mae began reporting renters’ payments to credit bureaus, the mortgage giant says its pilot program has made thousands of tenants more creditworthy.

Monthly rent payments aren’t usually reported to credit bureaus — a hole in the system that Fannie Mae’s initiative, launched in September 2022, aims to close.

Since the start of the pilot, more than 300,000 tenants’ payments are now reported to credit bureaus, and their typical credit score has gone up by about 40 points, says Fannie Mae CEO Priscilla Almodovar. More than 23,000 renters have established credit as a result of the program.

With results like that, says Almodovar, “The consumer should start asking for this.”

Rent payments ordinarily left off credit reports

Your credit score is the most important factor in determining whether you’re eligible for a home loan and your mortgage rate. Your credit score also affects how much you pay for credit cards, auto loans and insurance coverage. Landlords and employers often use credit histories to determine whether to approve a lease or extend a job offer.

For tenants hoping to become homeowners, rental payments are a sticking point: An unpaid $50 balance can ding your credit score, but paying your $2,000 monthly rent on time for years does nothing to boost your number.

Fannie Mae, one of the two government-sponsored enterprises buying residential mortgages in the U.S., developed its program in hopes of narrowing the racial wealth gap and boosting homeownership rates among Black and Latino populations. While nearly three-quarters of White Americans own their homes, less than half of Black and Hispanic Americans do, according to U.S. Census Bureau data.

How Fannie Mae’s rent reporting program works

In addition to its role as the largest buyer of residential mortgages, Fannie Mae also makes loans to apartment complex owners. Fannie Mae asked those landlords to take part in its rent reporting program.

Not all apartment owners were eager to participate. Some resisted because they feared losing tenants who pay on time to homeownership, says Almodovar. Fannie Mae countered that reporting rent payments incentivizes renters to stay on top of them.

“We had to almost prove the case to the property owners,” says Almodovar.

The program connects these landlords with financial services providers that report residents’ payments directly to the three credit reporting agencies, Equifax, Experian and TransUnion. The program reports only on-time rent payments, not late ones.

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Your payment history makes up 35 percent of your FICO score.

Tenants pay nothing for the service, at least for now. Fannie Mae is exploring whether to continue reporting payments for no charge, says Amoldovar.

Rent reporting services not always free

While 300,000 tenants sounds like a big number, that’s just a fraction of all Americans who pay rent each month.

If your landlord or property management company isn’t participating in Fannie Mae’s pilot program, there are other ways to get credit for your rent payments.

RentSpree, a rental property software company, recently debuted online rent payments that can be reported to TransUnion. While Fannie’s program focuses on large landlords, RentSpree processes payments for smaller owners of apartment buildings, says Michael Lucarelli, CEO and co-founder of RentSpree.

“Consumers aren’t aware that their on-time payments could and should be reported to the credit bureaus,” says Lucarelli.

RentSpree does charge for the privilege. The best deal is to set up an ACH payment for a fee of $3 a month. Tenants can use credit or debit cards to pay, but that carries a hefty 3 percent fee. (Tenants who pay their landlords directly by paper check or Zelle would pay no fee, but RentSpree wouldn’t report their on-time payments.)

Other companies have been reporting rent payments to credit bureaus for years, also at a cost. Rental Kharma will report your payments to TransUnion for a $75 setup fee and a recurring monthly charge of $8.95. Another service, RentReporters, charges a setup fee of $94.95, plus a monthly fee of $9.95.

Whether such a service is worth the cost really depends on your individual credit profile. If your credit score already is in the 700s, and you’re promptly paying off your credit cards and car loan, for instance, you can probably skip the cost of having rent payments reported to credit bureaus.

If, on the other hand, you don’t have credit cards or other loans, then having your rent payments included in your credit history is a straightforward way to bring yourself into the credit-scoring mainstream. It’s a strategy that doesn’t require you to take on debt — it simply gives you credit for something you’re already doing. If your credit score is low because of past problems managing debt, paying to have your rent payments recorded can undo some of that damage.