Rent payments now appear on Experian credit reports

For those of you without credit cards or mortgages, there's a new way to build your credit: Pay your rent on time.

In January, credit reporting agency Experian started including residential rental payment data on its credit reports. Previously, only mortgage payments were recorded because banks report monthly to the credit bureau.

This change will not, however, affect every consumer's credit because most landlords still do not report payments to Experian. But the company does expect the number of people impacted to be in the "low millions."

"For many, rent was their biggest monthly expenditure, and they never got the credit they deserved for making those payments," said Brannan Johnston, vice president and managing director of Experian's RentBureau. "Historically only negative information showed up for renters through collections or evictions."

So far, Experian has collected histories from more than 45 property managers across the country through its RentBureau division, which it said covers more than 8 million residents nationwide.

But Experian doesn't provide a list of participating properties. If you want to know if your credit will be impacted, you have to ask your management company or order a credit report from Experian.

Through the addition of rental data, one in three consumers falling in the lowest rung of Experian's VantageScore credit scoring model (receiving a letter grade of an F and scoring between 501 and 600) will move up to at least the next level (with a D-grade and a score between 601 and 700), the agency said.

And not only will including rental data help many consumers improve their credit, it has led Experian to open new files for a third of consumers with rental data in its system -- including college students and anyone without a bank account or credit history.

For those of you who aren't as responsible with your monthly payments, you're safe -- for now. Only positive accounts are currently being included on Experian reports. But the agency hopes to begin adding negative accounts to its reports next year.

While credit card issuers typically consider a payment late after 30 days, you're usually considered late after only 5 days with rental properties, said Johnston.

So instead of including negative data for consumers who have been late paying their rent from time to time, Johnson said Experian is likely only to include negative data if someone moved out of an apartment while still owing money, for example.

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