Choosing Rental Kharma to report my timely payments and increase my credit score
What is Rental Kharma?
Rental Kharma reports rent payments to a credit bureau on your behalf for a fee.
Many people assume rent payments are already part of their credit reports, but that’s almost never the case. The credit-scoring giant FICO says rent is an entry — called a “tradeline” — on less than 1% of credit files.
Yet there’s some evidence that these new rent tradelines can be a stepping stone to achieving the kind of credit scores traditionally used to, qualify for a car loan or a mortgage.
A year or two of rent payments can create a credit history without the lump sum of cash required for a secured credit card or the additional monthly payment of a credit-builder loan, two common ways to build credit history.
Credit reports are the raw material for credit scores. Calculating rent into your credit scores is an idea that is gaining traction. VantageScore considers it, and so does FICO 9, the latest version of the FICO score; the trouble is that earlier versions of FICO are in much wider use, than the scores that factor in rent.
It’s possible that having rental information in your files could improve your credit profile, particularly if you are still relatively new to credit.
Rental Kharma at a glance
To review Rental Kharma, NerdWallet gathered six data points, reviewed the online application process and pricing information, interviewed executives at the company and compared its services with others that serve the same customers.
Rental Kharma might be a good fit for you if:
You have a limited credit history and want to lengthen it. It will depend upon which credit score a potential lender uses to evaluate you. Or if you have credit and you want to avoid paying someone else to fix your credit. Over time reporting your good rental payments, may organically and naturally increase your credit worthiness.
Rental Kharma may be less valuable if:
You already have good credit. Credit card payments and credit-builder loan repayments, when reported to credit bureaus, are reflected in all credit scores.
Sources:
You might also enjoy