Zillow, the renowned US real estate platform, is set to revolutionize credit reporting for renters with its latest feature. Addressing the significant gap in credit reporting in the US, where rent payments aren’t typically reported to credit bureaus, Zillow’s new offering allows tenants who pay rent on time to build a credit history and unlock broader financial opportunities.
Through this new rent reporting feature, renters using Zillow’s platform can opt in for free. When rent is paid punctually, Zillow automatically reports these payments to Experian, a major credit bureau.
“Every on-time rent payment speaks volumes about a renter’s reliability, yet it’s often disregarded in credit reports, and we aim to change that,”Michael Sherman, Vice President of Zillow Rentals
With approximately 26 million Americans classified as “credit invisible,” lacking a history with major credit bureaus, this initiative holds particular significance. Zillow’s research underscores the disproportionate impact in Black communities, where residents often face higher rent burdens compared to mortgage payments, a legacy of historic redlining practices.
In cities like New Orleans, median renters in credit-insecure areas allocate a staggering 77.5% of their income to rent, far exceeding the typical mortgage expense of 28.6%.
By reporting on-time rent payments, Zillow aims to empower renters to strengthen their credit profiles, facilitating access to broader financial opportunities. Enhanced credit scores can lead to easier loan approvals, favorable rates for home purchases, credit cards, and future rentals, with the precise impact varying based on lenders’ credit scoring models.
“This innovative program underscores our commitment to recognizing and supporting responsible financial behaviors. It ensures that renters’ primary expense can now serve as a catalyst in their journey towards securing a place they can truly call home.”Sherman, Vice President of Zillow Rentals
To sign up for the service, tenants who pay rent through Zillow can follow three simple steps. Existing renters can enable rent reporting via the renter payment dashboard, while new renters will be prompted to opt in during enrollment. Zillow then identifies on-time payments made within 30 days of the due date and reports them to Experian monthly. Late payments, exceeding 30 days past due, will not be reported.