This is Increasingly Popular to Help Debtors Improve Credit Scores
NEW YORK ( MainStreet) More than 70% of American apartment dwellers want their rent to count toward their credit history, according to a new WilliamPaid survey.
The study found that a majority of apartment renters also want their rent as well as gas, electricity and telephone services to be a factor in determining their credit scores through credit reporting agencies.
"Consumers want more control when it comes to building their credit history, considering that rent and utilities make up a majority of their monthly expenses," said Jeff Golding, CEO of WilliamPaid, an online rent payment service. "This survey reaffirms that Americans want credit for making timely payments not unlike the credit that they receive for paying their credit card bills on time."
Such a change may be well on its way to becoming law now that Congress is considering an amendment to the Fair Credit Reporting Act called The Credit Access and Inclusion Act to address the more than 50 million consumers in America who have no credit history.
"It would broaden the scope of a credit report and give a more accurate reflection of someone's entire financial situation," said Katie Moore, a personal finance counselor with GreenPath Debt Solutions in Detroit.
Credit reporting agencies include Experian, Equifax and Transunion.
Under the Credit Access and Inclusion Act, consumers would be able to build credit history from their most frequent and important expenses.
"Many consumers feel that building credit history is an uphill battle but this approach gives renters credit for managing the payments for the place they call home," said Brannan Johnston, vice president and managing director of Experian RentBureau.
Results further reveal that 37% had been rejected for a credit application within the last year.
"That is an alarmingly high rate of rejection for credit," Golding said. "People in their late 20s to early 30s have no or poor credit history but are still spending large amounts of money every month that isn't helping them to build toward a better future. It shouldn't be the status quo that people have to debt in order to build credit."
Nearly half of the survey respondents who have an average monthly rent payment of $1,033 said that they plan on continuing to rent while 56% of respondents are renting an apartment with a plan to someday own a home.
"This is important to these individuals, because the credit report and score is used by a potential landlord or a potential employer and to determine insurance premiums," Moore told MainStreet. "Some professions even consider a credit score as part of professional certifications and licenses."