how to improve credit score by paying rent with a credit card?
there are various ways to build your credit history and improve your credit score. paying rent with a credit card could be one of the easiest ways to build a good credit history as long as you make your credit card payment on time. when you pay your rent and make your credit card bill payments on time, the same is reported to the credit bureaus and considered by credit-scoring formulas while preparing your credit score and credit report.
read below to find out more about how a positive rental payment history could make you look more favorable to potential lenders.
what’s the impact of rent payments on your credit report?
your credit score continuously changes based on your financial behaviour such as - debt payment, bill payments, new credit application, credit utilization ratio, etc. though rent payment would not directly impact your credit score, however, it matters when you use a credit card to pay your rent. if you make credit card payments on time, your credit score will increase, but if you don't make your credit card bill payments on time, it will not only lead to a drop in your credit score but you also have to pay late payment charges and interest on the overall amount. you should know that the credit rating agencies use all types of payment history, including mobile bills, cable, broadband, loans, credit cards, to evaluate the creditworthiness of an individual.
how do rent payments appear on credit reports?
rent payments, like other payments, have a significant impact on your credit report. most of the top credit bureaus, such as Equifax, Experian and TransUnion, include the rental payment history of an individual while preparing their credit reports. so, if your rent payments are being reported to credit bureaus, then it could affect your credit scores in many ways.
each credit rating agency use their own formulas to calculate the credit score. so how the rent payments will affect your credit score depends on two big factors - first, which credit-scoring company is calculating your credit score, and second, what formula they use to do it. when it comes to rent payments, not all agencies use the same scoring models.
you should also know that the credit rating agencies can use rent payment information only if it's reported to them. so, if your rent payment is not reported to a credit bureau, it will not show up on your credit report. unfortunately, you can't report your rental payments yourself, therefore, you need to ask your landlord or property manager if they could report your rental payments to the credit rating agencies. if you always pay your rent on time, it could help you improve you credit score. and if you pay rent with credit card, then make sure you make your credit card payment on time to build a positive credit history.
other benefits of paying rent with credit card
when you pay rent with credit card on the CRED app, you can earn reward points that can be used to claim various deals and discounts from premium brands. also, you get an interest free period of 45 to 60 days (depending on the credit card that you use) when you pay rent with credit card.
the facility to set-up auto-payment is another major benefit of using your credit card for rent payments. this will make sure that you never forget to pay your rent on time. your house rent will be directly transferred to your landlord account without any delay.
in conclusion
a good payment history is one of the most important components of building a strong credit score. by making rent payment with credit card and then paying your credit card bills on time, you can enhance your credit score significantly.