New online service Rental Kharma gives New York renters a chance to shine
Tenants can try to improve their credit scores by having rent payments sent to credit bureaus
Renters can’t get no respect – but that’s about to change.
For years, rent payments weren’t taken into account by credit bureaus, even though rent is often an individual’s single largest monthly bill.
Negative info, like an eviction, was factored into credit scores, not the good stuff like paying on time.
That’s a problem, especially in New York City where about 70% of the population rents. When renters go to buy a home or a car, their timely payments don’t count.
Enter Rental Kharma, a just- launched online platform that collects rent data and sends it to the credit bureaus.
For a one-time $10 fee, a renter can choose to supply Rental Kharma with proof of his or her payments. The hoped for result: an improved credit score.
“There are 100 million renters in the U.S. and less than 1% of them have had any positive rental payment history reported to the credit bureaus,” Rental Kharma founder Cullen Canazares told the Daily News.
“This enables renters to self-report verified rental payment history, up to two years of past data.”
TransUnion, one of the three big credit bureaus, has agreed to accept the data. It is being made available to landlords screening potential tenents, but is not currently part of TransUnion’s standard consumer credit report, TransUnion said.
The other two credit bureaus are expected to come on board in the coming months, Canazares said.
Having rent history included in credit scores could be beneficial for the many city renters who are now looking to capitalize on low interest rates and purchase their first homes. Many are facing tough scrutiny from lenders.
“A lot of people would like to be purchasers, but they can’t,” Citi Habitats president Gary Malin told the Daily News. “Something like this establishes their creditworthiness.”
Rental Kharma customers can verify their payments through their bank, their landlord, or by providing copies of cancelled rent checks.
How much a person’s credit score will be improved by a history of on-time rental payments depends on a variety of factors, Canazares said.
“People with very little credit will see a bigger impact on their data compared with someone who has a lot of credit,” he said.
Credit bureau Experian, which recently began including rent payments on its credit reports, said positive reports could have a meaningful impact on credit scores.
Canazeres is hoping to lure hundreds of thousands of customers by year’s end.
“Good renters deserve good credit,” he said.