If you have been making rent payments on-time for the past year and now thinking about taking the home buyer journey you will want to know these two quick tips for possibly raising your credit score. If you have consistently paid on rent on-time this change may help you achieve your dream of owning a home in 2022.Verify my mortgage eligibility (May 20th, 2022)
How to Have Rent Reported to Credit Agency
Before we explore the underwriting changes let’s look at some actions you can take to improve your credit score. Studies have proven that if a landlord reports positive rent history to the credit bureaus it will typically result in higher credit score.
- Talk to the landlord or property manager about having your rent history information reported to a credit agency. Reporting on time rent payments on your credit report will establish you as someone who pays bills on time. This is very important when buying your first home. Especially true if you do not have a long credit history.
- If the property manager or landlord refuses to report your rent payment all is not lost. You can sign up with one of the rent payment servicers who work with Experian RentBureau. The Experian RentBureau is a part of the credit report agency known as Experian. There are three major agencies: Experian, TransUnion, and Equifax. The rent payment servicers allow you to electronically make payments for rent and then opt-in to report your rental payment history to Experian RentBureau. This may help increase your Experian score within 30 days.
- The rent payment services do charge a fee for their services. Here are several rental payment service providers that you can check out: Rent Track, Pay Your Rent, eRentPayment. There are others as well that you can research and make the best choice to meet your financial needs.
Important Underwriting Changes Help First Time Home Buyers
If you are paying your rent through your checking account and can establish a consistent record of on-time payments, there is another piece of great news for home buyers in 2022.Verify my mortgage eligibility (May 20th, 2022)
On September 18, 2021, there was a change made to how conventional home loans were underwritten electronically. Basically, when your mortgage broker or mortgage banker runs your loan application through an automated underwriting program (like Fannie Mae’s Desktop Underwriter) the program will analyze your bank statement data to identify recurring rent payments. If you have a history of paying your rent through your bank account this will help to increase the possibility of improving the chances for a loan approval. This method of underwriting does not use the bank statement history to improve your credit score like the previous strategies discussed.
You will want to discuss these underwriting changes with your mortgage loan originator or mortgage company so you can better identify the best option for financing your home. Make sure your mortgage loan officer can explain these changes to you and customize a loan plan to help you make the wisest financial decisions when buying your home.Verify my mortgage eligibility (May 20th, 2022)
About the Author: Richard Blair (NMLS#213176) is a mortgage loan originator with 24 years of lending experience. Richard and his Team combine their personal touch with cutting edge technology to provide an amazing customer experience. Richard is part of the dwell Mortgage Team at Victorian Financial (NMLS#50635).Verify my mortgage eligibility (May 20th, 2022)
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