Perch, a new mobile app for iOS, wants to make your rent payments part of your credit reports. Unlike mortgage payments, rent payments aren't normally reported to the national credit bureaus, putting renters at a disadvantage in building a strong credit score. Other services that report rent payments already exist, but they can be expensive, and many require landlord involvement. Perch, on the other hand, is free, and you can do it all yourself.
- Perch allows renters to add their rent payments to their credit reports with two of the three credit bureaus, so far.
- Unlike other rent reporting services, Perch is free and doesn’t require landlord involvement.
- Generally, rent payments aren’t included in the credit score most lenders use, but that may change in the near future.
How Perch Works
Reporting rent payments to the credit bureaus isn’t a new concept. Services already exist that do that, including Rent Reporters and Rental Kharma, among others. But these services typically charge monthly fees and may also require your landlord's involvement, which can be difficult to get consistently.
Perch is a new mobile app that solves some of these problems. First, you don’t need to include your landlord in the process at all. It’s also free to use.
Perch works by having you provide the details of your lease and connecting your bank account to their system. The app will identify your rent payments and start reporting them to two of the three major credit bureaus, Equifax and TransUnion. The third bureau, Experian, will reportedly be added in July 2021.
The service also allows you to add up to 24 months of previous rent payments.
In addition to rent payments, you can add recurring subscription services, like Hulu, Netflix, and Spotify.
A Win for Renters
The credit industry is slowly moving toward recognizing renters. For example, the VantageScore 3.0 and 4.0 models include rent payments in their calculation of your credit score if those payments are part of your credit report. Also, the latest versions of the FICO score, FICO 9 and FICO 10, consider rental payments if they’re on your reports.
But most lenders still use the FICO 8 model and sometimes even older models in their underwriting process. So while it’ll be good to have the information on your credit reports, it won’t make a huge difference until more lenders adopt the newer scoring models. When that happens, it will be a huge win for renters.