No. Paying rent does not build credit ordinarily, but it is possible to build credit by arranging to have rent payments reported to the credit bureaus each month. Your credit score is calculated based on the contents of your credit reports, and rent payments normally are not reported to Experian, Equifax and TransUnion – the three major credit bureaus that produce credit reports. As a result, there are only two scenarios in which rent payments could affect your credit score, and only one of them is positive.
First, paying rent can build your credit score if you use a service that will report your rental payments to the credit bureaus. There are many ways you can report rent payments, so you should select the option that makes the most sense for you. If you consistently pay your rent on time, you can benefit from this addition to your credit report.
Second, renting could negatively affect your credit score if you fall behind on your monthly payments to your landlord. If your landlord turns your outstanding payments over to a collection agency, you will likely experience a drop in credit score when the collection account is added to your credit reports. You can find out exactly how much your credit score will suffer due to a collection account by using WalletHub’s Credit Score Simulator.
At the end of the day, there are more dependable ways to build credit than by paying rent. If you want to find out the best approach for your particular situation, you can view customized credit-improvement advice through your free WalletHub account.