How Do Landlords Report Late Rent to Credit Reports?

Answer

If you are the owner of a piece of real estate, receiving rent from tenants might provide you with an extra stream of income. Unfortuitously, not all renters pay their rent on time each month. When this occurs, you may choose to have the tenant’s credit record reflect the late payments that they have made in the past. However, before you can submit this information to the credit bureau, you will first need to complete a number of required actions.

Credit Reporting

Experian, Equifax, and TransUnion are the three largest consumer credit agencies, and each of them has a consumer credit database that is completely independent from the other two. Creditors are required to pay a fee to each of these credit bureaus in order to have their credit data reported. You are required to first become a client of the credit reporting services offered by the bureau before you are allowed to submit any information. If you don’t submit information to the bureau, then it won’t be able to include your tenant’s payment history in its credit database. This is because you can’t report information to the bureau.

Criteria for Subscribing

As a result of the fact that each of the three main credit bureaus works on its own, a landlord who is interested in reporting late rent payments will need to get in touch with each bureau individually and subscribe to its services. For a landlord to be eligible for this, they will need to fulfil a number of prerequisites, including the payment of subscriber fees, possession of the relevant hardware and software, and the ability to electronically report to the bureau. The qualifications for subscribers will differ from bureau to bureau.

Federal Law Compliance

Rental information is not often included in the types of credit-related data that are reported to the agencies. It is classified as “alternative credit data,” which is a term used to describe the costs that a customer pays, such as rent or utilities, but are not conventionally credit-based, like a credit card. There isn’t a lot of reporting of alternative credit data to the major credit agencies. You are not required to disclose tenant information to a credit agency in order to comply with federal law. This action is left up to your own judgement.

In the event that you do report, you are obligated to comply with the prerequisites outlined in the Fair Credit Reporting Act. The reporting of consumer credit is governed by this federal legislation. It requires you to report only correct information and to react to consumer complaints over the information that you have provided. In addition, it requires you to report only accurate information. If you breach the rights that the law grants to consumers, you might be subject to fines or other types of civil penalties.