Not All On-Time Payments Build Credit
You’re fiscally responsible. You pay your credit card bills and your rent on time, every month.
Paying your credit card bill on time is a major factor in raising your credit score. On-time mortgage payments also raise your credit score – but paying rent on time generally has no effect on your credit score.
Why is fiscal responsibility rewarded in one case and not the other?
While all credit card payments are reported to the three major credit bureaus (Experian, Equifax, and TransUnion), most rental payments aren’t. Your credit score is calculated based on the information in your credit report. Payments that aren’t reported can’t be considered – and not all credit-scoring systems take rental payments into account even when they are reported.
Lower-income Americans are hurt the most by this policy, since they’re more likely to be renters and to pay…
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