Obviously, everybody knows what a credit report is and where it comes from, right?

No, not from hell, it usually comes from one of the three major consumer credit reporting companies (credit bureaus): Equifax, Experian and TransUnion (some like to include a fourth agency on this list, namely Innovis).

This is where your creditor, employer, insurer, a government agency or any legitimate business owner (such as a potential landlord) can get information about you. They can find out four types of information:

• Identifying information like your full name, address, SS number, date of birth, about your spouse and so on;
  

• Credit information from the accounts you have with banks, credit cards issuers, utility companies etc.;
  

• Public record information from court records on bankruptcy, monetary judgments;
  

The data furnishers are typically the same kind of institutions or businesses as the inquirers, but who have already had a relationship with you. Nevertheless, recent estimates say that 35 to 54 million Americans have insufficient credit information to qualify for mainstream credit (and those numbers do not include the illegal immigrants).

Faced with this reality, specialists suggested that the inclusion of alternative data in credit files could bring many of these underbanked individuals into the credit fold.

Alternative data includes utility and telecommunications bills, electronic payments and rental payments.

In June 2010 Experian purchased RentBureau, which “houses” rental payment histories on over 7 million U.S. residents. This data will be included in Experian consumer credit reports as of January 2011.

Until now only negative rent payment history (like evictions or civil judgements for unpaid rent) would appear in your credit report, and positive rent payment could not help.

For those with no or too little credit history to qualify for traditional credit lines, paying the rent in full and on time may become even more important than before.

If you aren't quite that responsible with your monthly payments, you're safe for now. Only positive accounts are currently being included on Experian reports. But the agency will begin adding negative accounts to its reports next year.

While credit card issuers consider a payment late after 30 days, you're usually considered late after only 5 days with rental properties, so please be cautious.

Experian is currently the only credit reporting agency to include rental payment data, so your credit reports from TransUnion and Equifax won't reflect how good (or bad) a renter you are. 

FICO, which is the public company that provides credit scoring (among other analytics and decision making services) may include the rental accounts in their scores once they will have fully evaluated the predictive nature of the information (FICO scores measure the risk of someone becoming seriously delinquent in the next 24 months).

Since Experian doesn’t provide a list of participating properties, the way to find out if your credit will be impacted is to ask your management company to order a credit report from Experian.

As usual, please check the News section on our website for more information that may be of interest to you, and remember we are here to be of service to you!