Big news in the credit score arena. Credit reports are getting an important new addition-apartment rental scores. This is great news for renters or people who wish to establish a positive credit history and good credit score. Experian is the first of the big three credit bureaus to include this data, adding millions of apartment rental accounts to their credit file database in December 2010.
For decades, the only time apartment rental accounts would show up on credit reports was if you were in collections or had been evicted. Experian acquired RentBureau, the company furnishing the apartment rental data, exhibiting its willingness to step outside of the financial services comfort zone. This is significant as anytime something new is added to a credit report, the provider of the data is exposed to potential liability and Fair Credit Reporting Act obligations.
According to Brannan Johnson, VP and Managing Director of Experian RentBureau, this was no easy task, “We did it as soon as we could. It took a lot of time and effort to load the data to the Experian database and go through legal and compliance reviews. Our goal for quite some time has been to expand the breadth of the Experian credit file. For many consumers their rent represents their largest monthly obligation. The rental data provides the first account on many consumers’ Experian files.”
This creates a credit file for many consumers. One third of the consumers in the former RentBureau database had no Experian credit file, or at best they had a thin credit file. Like it or not, people are much better off having a credit report than not having a credit report. A credit report is essential for doing business with mainstream lenders and having access to more credit at better terms.
The apartment accounts will be updated monthly by Experian, just like mortgage, auto and revolving credit accounts. If a consumer wants to dispute the accuracy of one of the rental accounts, the same protocol for disputing accounts will apply. Experian won’t add negative rental history until 2012.
FICO says they won’t include the rental accounts in their scores until they’ve had the opportunity to fully evaluate the predictive nature of the information.
So, here’s the round-up. An improvement in credit scores for the majority of renters, access to better credit at better terms and an important first step in building a strong credit score