Credit Reporting

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Have you ever wondered how your rental payments affect your credit score? Or why your lease appears as an installment loan on your credit report? We've compiled answers to these common questions and more to help you better understand the impact of rental payments on your credit history.

Will my rental payments affect my credit score?

Yes, your rental payment history can influence your credit score. Positive rental payment information is included as part of your standard credit report and may be factored into certain credit scores. These credit scores take into account your payment history, including timely rental payments.

Can I improve my credit by paying my rent on time?

Absolutely! By consistently making on-time rental payments, you can establish or rebuild your credit. The inclusion of positive rental payment history within your credit report allows you to demonstrate responsible financial behavior, which can positively impact your creditworthiness. This, in turn, can help you qualify for better credit products in the future.

How will lenders use my rental payment information?

Lenders may consider your rental payment history when assessing your ability to repay new debt. While each credit grantor has its own criteria for granting credit, your positive rental payment history can serve as evidence of your financial responsibility and repayment habits.

Why does my lease appear as an installment loan?

Your lease is categorized as installment credit, similar to an auto loan. Installment credit involves making regular payments of a fixed amount over a set period, typically measured in months or years. Thus, your lease is considered an installment loan due to its structured payment schedule.

Why does my credit report show a credit limit for my lease when it is not a line of credit?

Credit providers calculates an "original loan amount" for your lease, which represents the total sum of payments you will make throughout the lease term. For example, if you have a 12-month lease with a monthly payment of $1,000, the original loan amount would be $12,000. Although some credit report systems may display this amount as a credit limit, it does not imply that you have a line of credit or received a loan.

Why does my credit report show an outstanding balance for my lease when I don't owe any money?

The outstanding balance or "current balance" displayed on your credit report represents the total amount of rental payments remaining on your lease. It denotes the sum you will be responsible for paying over the remainder of the lease term. As you make monthly rent payments, the outstanding balance will gradually decrease.

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