More accurate credit scores

Oct 13, 2025 by talynt.org 43 views

The Evolution of Credit Scores: How Rent Payments are Revolutionizing the Industry

Starting last December, Experian, one of the three major credit-score trackers, added monthly rent payments as a criterion for calculating a credit score. This significant change is expected to have a profound impact on the way credit scores are determined, and it's essential to understand the implications of this shift. In this article, we'll delve into the world of credit scores, exploring the history of credit scoring, the current state of the industry, and the impact of Experian's decision to include rent payments in their calculations.

Credit scores have been around for decades, with the first credit score being introduced in the 1980s. The three major credit-score trackers, Experian, TransUnion, and Equifax, have been calculating credit scores based on a variety of factors, including payment history, credit utilization, and credit age. However, until recently, rent payments were not considered a factor in credit score calculations.

Prior to Experian's decision, the three major credit-score trackers had different approaches to calculating credit scores. Experian and TransUnion focused on negative rent payments, such as evictions or late rent payments, while Equifax did not consider rent payments at all. This meant that individuals who paid their rent on time but had other negative marks on their credit report may have been penalized, while those who had a history of late rent payments may have been unfairly rewarded.

Experian's decision to include monthly rent payments as a criterion for calculating a credit score is a significant shift in the industry. By considering positive rent payments, Experian is recognizing the importance of on-time rent payments in building a strong credit history. This change is expected to benefit individuals who have a history of paying their rent on time, as it will provide a more accurate reflection of their creditworthiness.

Experian's new credit score calculation takes into account both positive and negative rent payments. Positive rent payments are calculated based on the following factors:

Payment history: Experian considers the frequency and timeliness of rent payments, with on-time payments contributing positively to the credit score.
Payment amount: The amount of rent paid is also considered, with higher payments contributing more positively to the credit score.
Payment duration: The length of time an individual has been making on-time rent payments is also taken into account, with longer payment histories contributing more positively to the credit score.

While Experian's new credit score calculation considers positive rent payments, it also takes into account negative rent payments, such as:

Evictions: Evictions are considered a negative mark on an individual's credit report, and will negatively impact their credit score.
Late rent payments: Late rent payments are also considered a negative mark, and will negatively impact an individual's credit score.
Rent payment disputes: Disputes over rent payments, such as claims of non-payment or disputes over the amount owed, are also considered negative marks.

Including rent payments in credit score calculations has several benefits, including:

More accurate credit scores: By considering both positive and negative rent payments, Experian's new credit score calculation provides a more accurate reflection of an individual's creditworthiness.
Increased credit access: By recognizing the importance of on-time rent payments, Experian's new credit score calculation may increase credit access for individuals who have a history of paying their rent on time.
Improved credit reporting: Experian's new credit score calculation may also lead to improved credit reporting, as it provides a more comprehensive picture of an individual's credit history.

Experian's decision to include monthly rent payments as a criterion for calculating a credit score is a significant shift in the industry. As the other two major credit-score trackers, TransUnion and Equifax, consider following suit, it's likely that credit scores will become even more accurate and reflective of an individual's creditworthiness. This change has the potential to benefit individuals who have a history of paying their rent on time, and may lead to increased credit access and improved credit reporting.

The evolution of credit scores is a complex and ongoing process. Experian's decision to include monthly rent payments as a criterion for calculating a credit score is a significant shift in the industry, and is expected to have a profound impact on the way credit scores are determined. By recognizing the importance of on-time rent payments, Experian's new credit score calculation provides a more accurate reflection of an individual's creditworthiness, and may lead to increased credit access and improved credit reporting. As the industry continues to evolve, it's essential to stay informed about the latest developments in credit scoring.
Frequently Asked Questions: Rent Payments and Credit Scores

Experian's decision to include monthly rent payments as a criterion for calculating a credit score has left many individuals with questions about how this change will impact their credit scores. In this article, we'll address some of the most frequently asked questions about rent payments and credit scores.

A: Experian's new credit score calculation will consider both positive and negative rent payments. If you have a history of paying your rent on time, this will positively impact your credit score. However, if you have a history of late rent payments or evictions, this will negatively impact your credit score.

A: Yes, Experian's new credit score calculation will consider late rent payments as a negative mark on your credit report. This will negatively impact your credit score, but the extent of the impact will depend on the frequency and severity of the late payments.

A: Yes, Experian's new credit score calculation will consider evictions as a negative mark on your credit report. This will significantly negatively impact your credit score, and may make it more difficult to obtain credit in the future.

A: Experian's new credit score calculation will positively impact your credit score if you have a history of on-time rent payments. This will demonstrate to lenders that you are a responsible borrower and are more likely to make timely payments on other debts.

A: Yes, Experian's new credit score calculation will consider the credit history of your co-signer. If your co-signer has a history of late rent payments or evictions, this will negatively impact your credit score.

A: Experian's new credit score calculation will consider rent payment disputes as a negative mark on your credit report. This will negatively impact your credit score, but the extent of the impact will depend on the severity of the dispute.

A: Yes, Experian's new credit score calculation will consider rent payments made through a third-party service as a positive mark on your credit report. This will demonstrate to lenders that you are a responsible borrower and are more likely to make timely payments on other debts.

A: You can check your credit score for free on Experian's website. This will give you an idea of how Experian's new credit score calculation will affect your credit score.

A: There are several steps you can take to improve your credit score if you have a history of late rent payments or evictions. These include:

Making timely rent payments: This will demonstrate to lenders that you are a responsible borrower and are more likely to make timely payments on other debts.
Paying off outstanding debts: This will reduce your debt-to-income ratio and make you a more attractive borrower to lenders.
Avoiding new credit inquiries: This will prevent your credit score from being negatively impacted by multiple credit inquiries.
Monitoring your credit report: This will allow you to identify and dispute any errors on your credit report.

Experian's decision to include monthly rent payments as a criterion for calculating a credit score has left many individuals with questions about how this change will impact their credit scores. By understanding how Experian's new credit score calculation will affect your credit score, you can take steps to improve your credit score and become a more attractive borrower to lenders.