If you have a credit card you are likely aware of the importance of paying it off on time to build a strong credit history and a favorable credit position. There are multiple ways to build your credit history most of which are centred around showcasing that you can repay loans and debts on time, but did you know that you can build credit without having to borrow first?
This is where rent reporting comes in. Rent reporting allows you to report your rent payments to credit bureaus. This can have a positive impact on your credit position and overall creditworthiness.
Rent reporting may benefit you by helping you to:
Improve your credit position
Your credit position is a numerical representation of your creditworthiness. It’s used by lenders to determine whether or not to approve you for credit, and at what interest rate. It is important to start building a favorable credit position as soon as possible regardless of if you are looking to capitalize on this in the near future.
Payment history is the most important factor in determining your credit position. By reporting your on-time rent payments to credit bureaus, you may improve your payment history and, in turn, your credit position. This can make it easier to get approved for loans, credit cards, and other forms of credit.
Build credit history
If you’re new to credit or have a limited credit history, rent reporting can be a great way to start building credit! When you pay rent on time every month, you’re demonstrating to lenders that you’re responsible and capable of making regular payments.
This may help you establish a positive credit history, which is essential for obtaining credit in the future. Emma reports to all three major credit bureaus in the UK so your rent payments are utilised to their full potential.
Get credit for good behavior
Rent reporting could also help you get credit for good behavior. If you’ve been paying your rent on time for years, you deserve recognition for that. By reporting your on-time rent payments to credit bureaus, you could ensure that your good behavior is reflected in your credit report and credit position.
This may help you get better terms and lower interest rates on loans and credit cards.
Increase your credit limit
Your credit limit is the maximum amount of credit you can use on a credit card or line of credit. By improving your credit position and credit history through rent reporting, you may be able to increase your credit limit.
This can be helpful if you need to make a large purchase or want to have more credit available for emergencies.
Save money on interest
When you have a good credit position and credit history, you may be eligible for lower interest rates on loans and credit cards. This may save you a significant amount of money over time. For example, if you have a £10,000 car loan with a 5% interest rate, you’ll pay £1,322 in interest over five years. If you have a 3% interest rate, you’ll pay £795 in interest over five years. That’s a savings of £527 simply for having good credit!
Stand out as a renter
The rental market has been crazy competitive as of late and rent reporting can help give you a leg-up over the competition. Landlords and property managers may be more likely to choose tenants who have a history of paying rent on time and have a good credit position.
By reporting your on-time rent payments, you may demonstrate that you’re a responsible tenant who is serious about their financial obligations.
To sum it up, rent reporting could have a number of benefits for renters. By reporting on-time rent payments to credit bureaus, renters may improve their credit position, build a credit history, get credit for good behavior, increase their credit limit, save money on interest, stand out as a renter, and encourage on-time payments. If you’re a renter who wants to improve their credit position and financial standing, you should most certainly consider rent reporting with Emma.
How do I get started with rent reporting?
You can do so directly in your Emma app feed by simply scrolling to the bottom of your feed and selecting the rent reporting section. From there, you can identify your rent payments and we will begin reporting your rent payments each month.
To be eligible for rent reporting you must be making direct rent payments to your landlord or letting agent in order to be reported. If your rent payments are being made to a flatmate or another third party you will not be eligible for rent reporting. Additionally, you must have been residing in your current rental for a minimum of 6 months to be eligible for rent reporting.