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Despite the fact that many young Americans pay rent, on time and in full, on a regular basis, none of these diligent payments are reported to the big three credit reporting agencies. Why? Because often rent is paid via check, transfer, or cash to your landlord. Landlords typically haven’t reported any of this information to the credit agencies, and therefore this valuable information from your financial history has been wasted.
TransUnion determined that reporting on-time monthly rent payments to the credit bureaus raised the credit scores of nearly 20 percent of renters by 10 points after only one month. Considering some renters often struggle with poor or no credit history, their rent is usually the most important bill they pay every month. So it can make sense to have it reported to improve their overall rating.
Enter Pinch Rent, an application aimed at improving people’s credit scores by reporting their monthly rental payments. Read on to find out how Pinch Rent works.
Building Your Credit With Pinch Rent
The Pinch Rent process is relatively easy. Customers download a free mobile app and upload a lease agreement. Once their personal information, including Social Security number, bank information, and lease are processed, users can then begin to submit their monthly rent payments to improve their credit score.
Pinch Rent itself doesn’t handle any cash transactions; users simply submit evidence of their rent payment for verification. They accept a photo of a money order, an e-transaction receipt, or a photo of a cashed check receipt. Pinch Rent takes this information and begins reporting rental payments to each credit reporting agency.
A helpful feature of Pinch Rent is it’s entirely free for tenants. Unless you are a property manager looking to implement the process from the other side of the equation, there are no fees for using Pinch Rent. According to Pinch Rent, most people see improvements to their credit score within a few months, but Pinch Rent also makes it clear they cannot predict what shift to expect. For example, one user reported a 74-point increase over a month, but it does depend on the user’s personal credit history as well as the credit reporting agency. Each agency compiles data differently.
There are other companies on the market doing the same thing, like RentTrack, but their service costs $6.95 monthly. Adopting either option can have a huge positive influence on your credit score, but a free application is arguably better.
The benefits of using Pinch Rent are pretty straightforward. If you make on-time rent payments to your property manager, you will very likely be on your way to having a good credit score. They can also report any rent payments from the past 24 months, giving you a two-year head start on the process.
If you have a history of making late payments or missing rent entirely, it might not be a good idea to download the app. Just like Pinch Rent reports all of your on-time payments, they will also report any late payments. This can leave lasting damage to your credit score.
Another challenging issue is if you are not listed on the lease. Roommates, especially those not on the lease agreement, will find it pretty impossible to report their rental payments through the acceptable methods. Consider speaking with your landlord to see if they will make the switch on their end.
For a free application that can improve your credit score simply for something you already do on a monthly basis, Pinch Rent can be a great idea. So long as you are diligent about paying rent in a timely manner, and can follow their basic requirements for reporting, users of this app should see some improvement to their overall credit rating.
Author: Jeff Gitlen