For the millions of consumers with poor credit scores, owning a home may feel like an impossibility. However, to take steps toward home ownership, consumers have increasingly turned to rent-to-own agreements. These contracts allow people to move into homes and pay rent installments with the option of working toward long-term ownership.
Traditional thinking is that such a system will improve one's credit score, moving them closer to home ownership whether in the existing location or not. But, Jeremy Simon of Fox Business writes that is often not the case. Individual landlords tend not to report rental data to credit agencies, though Experian recently introduced rental data into its credit scoring formula - but on a condition.
"These are generally larger property managers, and we don't currently accept reporting from individual landlords," Brannan Johnston, vice president and managing director of Experian Rent Bureau, told Fox Business.
If a renter pays a landlord who does not report rental data and an individual can not improve his or her credit score, seeking alternative consumer credit data
may be the best course of action. FOX Business reports
that renters can pursue credit through PRBC Credit Reporting Agency, which could help a person obtain lending that was previously denied.