You probably already know credit scores are important, but do you know how to increase your credit score? Your credit rating determines whether you can get a loan and what your interest rates will be. It’s also what auto insurers use to set your premiums.
Paying rent online can help improve your credit score. According to a study from TransUnion of 12,000 renters, reporting rent to credit bureaus raised scores by an average of 16 points within six months. When you pay your rent online, the service reports your payments to credit bureaus, and it gives those bureaus more information to accurately determine your score. How you pay online also can boost your rating even more. Here’s how it works.
Reporting Payment Information
Paying your rent on time is essential if you want to keep your home, but it won’t help build your credit unless you’re paying online.
“Simply paying your rent will not help you build credit,” says Bev O’Shea at NerdWallet. “But reporting your rent payments can help you build credit—especially if you are new to credit or do not have a lot of experience using it.”
So what can you do to ensure your on-time rent payments count toward your credit score?
When you pay your rent online at Somerset Apartment Homes, our system automatically reports to credit bureaus. That means the bureaus record your on-time payments, which contribute to a higher score.
Giving Credit Bureaus What They Need
So you know what a credit score is, but do you understand how the bureaus determine your score? According to NerdWallet, bureaus look at the amount of time you’ve had credit and the kinds of credit you have, like loans and credit cards. Your total balances and debt and the amount of time since you’ve applied for a credit card or loan also count.
However, the biggest factors are payment history and credit utilization, which is the part of your credit limit that you use. So when you pay your rent online, it becomes part of your payment history and can increase your credit score.
Boosting Your Score Even More
If you want to boost your score further, pay your rent online with a credit card that you only use for that purpose. Then pay that card’s balance in full every month.
LaToya Irby, credit expert at The Balance, says timely credit card payments will help increase your score, in addition to the boost you’ll likely see from paying rent on time, online.
Raise your credit score with online rent payments through our resident portal. When you pay online, we report your information to credit bureaus, giving them the information they need to determine your credit score accurately. Also, if you pay online with a credit card, you may boost your score more.