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TransUnion Analysis Finds Reporting of Rental Payments Could Benefit Renters in Just One Month
Monday, August 4, 2014 6:30 AM

A new TransUnion analysis found that the reporting of rental payment information to the credit bureaus in a manner similar to other financial obligations could have a positive effect for the majority of subprime consumers' credit. The subprime segment of the population, those consumers who may be viewed as higher credit risks, could experience positive effects with only one month of on-time rental payment information.

The analysis found that approximately eight in 10 subprime consumers (79.1 percent of those with a VantageScore® 2.0 credit score lower than 641 on a scale from 501 to 990) experienced an increase in their score one month into their new apartment lease. Nearly 41 percent of subprime consumers saw their VantageScore increase by 10 points or more after one month.

TransUnion's research also compared the credit score impact of being a first-time homebuyer (where the mortgage payment is reported to the credit bureaus) versus being a renter (where the apartment rental payment is not reported). The research found that, on average, those who became first-time home buyers in early 2012 experienced a 5.2 percent increase in their credit score over the next year. However, the average renter actually saw a slight decline (-0.4 percent) in credit score during this same timeframe.

In addition to the potential positive impact already described for subprime renters, TransUnion's analysis found that the majority of the overall renter population could also benefit from having their rental payments reported via ResidentCredit. Nearly seven in 10 renters (66.7 percent) in the analysis experienced positive or neutral VantageScore credit score changes after just one month. Nearly two in 10 renters saw a 10-point increase to their score or better in the first month.