How On-Time Rent Payments Can Build Your Credit Score with Fannie Mae


  • Fannie Mae will now take rent payment history into account when approving borrowers for mortgages.
  • You still need a credit score of at least 620 to qualify for a mortgage with Fannie Mae.
  • You can also use a rent reporting service to make sure your rent payments are factored into your credit score.
  • Read more stories from Personal Finance Insider.

If you’re worried that you’ll never be approved for a mortgage because of your bad credit or lack of credit history, you may be closer to homeownership than you think.

In August, Fannie Mae, the leading source of mortgage finance in the United States, implemented new technology that will include consistent rent payments when assessing a borrower’s creditworthiness.


mortgage lenders

only used FICO credit scores to assess whether or not a borrower might have a mortgage, but credit scores rarely show a borrower’s full payment history.

Rent payment history can give lenders a better idea of ​​a borrower’s payment habits

Late payments on lines of credit can stay on your credit report for seven to 10 years, making it difficult to raise your score in time to qualify for a mortgage with the lowest interest rates.

Additionally, the Consumer Financial Protection Bureau reports that 45 million consumers are “credit invisible,†which means they are denied credit because they do not use or cannot access credit. Black, Hispanic, immigrant and low-income communities are more likely to become invisible due to barriers to accessing credit, according to research conducted by VantageScore.

People who are invisible to credit are less likely to qualify for a mortgage, as lenders seek proof that a borrower can commit to making monthly payments on time. Essentially, you have to have credit to get credit, which can be frustrating and confusing for first-time borrowers.

In contrast, a history of on-time rent payments can give a more accurate picture of a borrower’s payment patterns than a credit score. In times of financial hardship, tenants usually prioritize rent payments over credit card payments.

Missing a credit card payment can negatively impact your credit score, but paying rent on time usually goes unreported. Adding rent payment history can give mortgage lenders a clearer picture of a borrower’s mortgage eligibility.

You still need a credit score of at least 620 to be eligible

Here are the eligibility requirements for a borrower to include their rent payment history, according to Fannie Mae. To be eligible, a borrower must:

  • Being a first-time buyer with the purchase of a main residence
  • Have a credit score of at least 620
  • Have been a tenant for at least 12 months
  • Have rent payments of $ 300 or more per month
  • Have bank accounts that document the last 12 months of recurring rent payments.

If you meet these conditions, you shouldn’t have to do anything more to make your rent payments count. Since this technology was only implemented a few months ago, it couldn’t hurt to call your lender and verify that your mortgage broker knows to look up your rent payments on your statements. banking when you start the application process.

You can also register for a rental declaration service

Financial technology services such as RentReporters, LevelCredit, or Rental Kharma report your payments on time to the credit bureaus for a monthly fee typically less than $ 10. Rent reporting services can boost your credit score and give you a good credit history without opening a loan or credit card.

If you are paying rent digitally, there may be an option to automatically send each monthly payment to credit reporting services. Make sure to check this box to instantly boost your credit score and save your rent payment on time.

If you pay your landlord with a paper check, you may be able to use a rent declaration service with your landlord verification.

In addition to improving your credit score, rent reporting services also make it easier for lenders to consider your rent payment history when applying for a mortgage.


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