Alternative Credit Building Apps: A Guide on Rent and Bill Reporting

You pay your rent on time every single month. You pay your electric bill and your phone bill, too. These are likely your biggest monthly expenses, yet they usually do nothing to help your credit score. That can feel unfair, especially when you are working hard to build a solid financial future.

Many people are now looking into rent and bill reporting as a way to get credit for the bills they are already paying. But how does it actually work? Is it worth the cost? And are there other ways to build credit that might work better for you?

As part of our series on the Tools to Build Credit, which covers different strategies for building your credit. Here is a simple guide to understanding rent reporting and other options to help you take control of your financial journey.

How Rent Reporting Works

Unlike a credit card or a car loan, your landlord usually does not send your payment history to the credit bureaus (Equifax, Experian, and TransUnion). This means your on-time payments do not automatically show up on your credit report.¹ Payment history makes up 41% of your VantageScore 4.0, so having them reported could have a large impact. 

To have these payments show up on your credit report, third-party rent reporting services act as a middleman. Here is how the process works most of the time:

  • Sign Up: You (or sometimes your landlord) sign up with a reporting service.

  • Verification: The service checks with your landlord or connects to your bank account to prove you paid rent.¹

  • Reporting: The service sends that data to the credit bureaus to add a new account record to your credit report.²

The Pros and Cons of Rent Reporting

Before you sign up, it is important to weigh the pros and cons to understand if this is a good option for you. 

The Benefits:

  • Build History with Payments You’re Already Making: You don't have to take out a loan to show you can make payments on time.¹

  • Help for "Thin Files": If you have no credit history at all, this can create a track record for you.¹

The Downsides:

  • It Can Cost Money: While some services are free, there is usually a signup fee (sometimes up to $95) or a monthly subscription fee (often $6.95 to $14.95).²

  • It Doesn't Count for Every Score: Some credit scores used by lenders may not include rent payments in its calculation. Newer scores (like FICO® 9 and VantageScore®) do, but not every lender uses those yet.¹

  • Missed Payments Hurt: Just like a credit card, if you miss a rent payment while using these services, it can hurt your score.¹

What About Utility Bills?

Similar to rent, your phone, water, and electric bills usually don't help your credit score. There are services out there that can report these payments as well. They typically require you to link your bank account to scan for these payments. If found, they are added to your credit report.⁵

However, just like rent reporting, this may only impact specific versions of your credit score. It can be a helpful boost, but it might not be a "magic fix" if you are trying to qualify for a credit product with a bank that uses older scoring models.⁵

A Different Way to Build Credit: Introducing Perpay

Rent reporting services can be useful, but they might not check all of your boxes. If you are looking for a simple, stress-free way to build credit using the money you already earn, Perpay offers a unique solution. 

Imagine if your paycheck could build your credit. With Perpay, it can. Here’s how it works: 

  • Perpay+: Get up to $1,000 spending limit reported to all three major credit bureaus (Equifax®, Experian®, and TransUnion®) for just $5/month. 

  • Perpay Marketplace: Take your credit to the next level by using your spending limit to shop in the Marketplace.* Pay over time for items you need, and have your on-time payment history reported to the credit bureaus.** 

  • Pay from Your Paycheck: Payments are deducted automatically from your paycheck on payday. It’s stress-free, stays on track with your schedule, and helps you avoid missed payments.  See our Terms & Conditions for more information.

Why Perpay is Different

  • Real Results: See your score increase by an average of 32 points within the first three months of reporting.**

  • Transparent Pricing: You never pay interest or late fees in the Perpay Marketplace. If you choose to build credit with Perpay+, you can opt-in for a small monthly fee of just $5/month.

  • Trust: As a Certified B Corp, Perpay is committed to a higher standard of accountability to drive a positive impact on all of our stakeholders, especially our customers. 

Final Thoughts

Rent and bill reporting can be a helpful tool, especially if you are starting from zero. However, it is important to watch out for monthly fees and understand that not all lenders will see that data.

If you think Perpay may be a good fit for your situation, you can join here in just 30 seconds.

Frequently Asked Questions (FAQ)

  1. Can I report my rent to the credit bureaus myself? You'll need a verified third-party service to report your rent. Individuals can't report directly to bureaus, but these services verify the data for you.¹

  2. Does Perpay check my credit? Applying for Perpay will not affect your FICO® or Vantage® score. We do not perform hard credit checks with the three major bureaus for approval. However, we may review information from alternative bureaus to help determine your spending limit.*

  3. Is rent reporting free? It is rare to find completely free rent reporting. While some apps offer basic versions for free, most comprehensive services that report to all three bureaus will charge a setup fee or a monthly subscription fee.²

Sources:

  1. https://www.chase.com/personal/credit-cards/education/build-credit/does-paying-rent-build-credit-history
  2. https://www.apartmentlist.com/renter-life/rent-reporting-services
  3. https://www.payrent.com/articles/rent-reporting-pros-and-cons-for-landlords-and-tenants/
  4. https://vantagescore.com/consumers/blog/the-complete-guide-to-your-vantagescore
  5. https://credit.com/blog/how-to-add-rent-and-utilities-to-your-credit-report

*Access to the Perpay Marketplace is offered by Perpay, Inc., and is only available to eligible consumers residing in the United States. The Perpay Marketplace is subject to credit approval. Applying for a Perpay account will not affect your FICO® or Vantage® score. However, we may obtain information from Clarity which may affect your credit profile with this alternative credit bureau. See our Terms & Conditions for more information.

**On-time payment history can have a positive impact on your credit score. Improvement in your credit score is dependent on your specific situation and financial behavior. Failure to make on time payments by the payment due date may result in delinquent payment reporting to credit bureaus which may negatively impact your credit score. This product will not remove negative credit history from your credit report. Impact on your credit may vary, as credit scores are independently determined by credit bureaus based on a number of factors. Perpay will report your transactions to Experian®, Equifax®, and TransUnion®. Credit score improvement is not guaranteed.

Perpay does not provide financial, legal, or regulatory advice. The content is for general informational purposes only. Any views expressed are those of Perpay, not its partner institutions. We do not endorse or guarantee the accuracy of any linked third-party information. Links to Perpay products are advertisements. All external brand names belong to their respective owners.

Credit 101Perpay