BAM Key Details: 

  • Zillow now offers a new reporting system that makes it easier for “credit invisible” American renters to build credit, which is essential to qualifying for a mortgage loan. 
  • Many renters in Black communities still face obstacles to building credit, which often results in much higher monthly housing costs compared to the typical mortgage. 
  • Given Zillow’s lack of presence in many smaller communities, it remains to be seen how many renters, especially those in historically redlined neighborhoods, will have access to this option. 

Zillow is launching a new feature that enables renters paying their rent through Zillow to build credit by having their on-time rent payments reported to Experian—one of the major national credit bureaus—at no cost to them. 

That makes Zillow the first online rental marketplace to offer renters the opportunity to build or improve their credit by paying their rent consistently and on time. 

Granted, the concept isn’t new, and Zillow probably won’t be the only rental platform with this feature for very long. But it’s still good news for renters out there—especially those in Black communities, where rent payments often take a much larger share of household income than a typical mortgage payment. 

This is often due to limited credit access for these communities, which can be traced back to systemic racism and historic practices like redlining. 

Renters in many communities still face obstacles to building credit, which ultimately results in a significantly higher cost of living compared to those whose credit history allows them to save money with a mortgage while building generational wealth. The “poor tax” is a real thing. 

In New Orleans, for example, the median renter pays more than three-quarters (77.5%) of their household income on rent, compared to around one-quarter (28.6%) for the typical mortgage payment.

About 26 million Americans are “credit invisible”

Every year, renters in the U.S. spend hundreds of billions of dollars on rent payments that, too often, have zero impact on their credit. And without credit history and a high-enough credit score, these renters are out of luck when it comes to qualifying for a mortgage. 

In fact, according to the Consumer Financial Protection Bureau, around 26 million Americans are “credit invisible,” meaning, as far as major credit bureaus are concerned, they don’t exist. 

Helping these renters build credit with on-time payments gives them access to a broader range of financial opportunities, including homeownership and investing in real estate. 

Higher credit scores help borrowers get easier and faster loan approvals and qualify for lower interest rates on home purchases, credit cards, etc. A strong credit history and a good credit score can be life-changing. 

Every on-time rent payment is a testament to a renter’s reliability, yet it’s often overlooked in credit reports, and we want to change that. This new program is all about acknowledging and supporting consistent financial habits. It ensures renters’ largest expense can now work in their favor and potentially help them on their path to finding and securing a place they can call home.

Michael Sherman

Vice President of Zillow Rentals

Renters who use the Zillow platform to pay their rent can opt into this feature at no cost. Once they do, Zillow will report every on-time payment to Experian. Late payments are not reported. 

How Zillow’s reporting system works

Zillow’s press release gave a brief overview of the reporting process:

  1. Opt-in—Renters already making their rent payments through Zillow Rentals can enable rent reporting via the Renters Payments Dashboard on the Zillow platform. New renters on Zillow will be asked, when they enroll, whether they’d like to opt into rent reporting. 
  2. Payment Tracking—For renters opted into the program, Zillow identifies every on-time rent payments (all those made within 30 days of the due date)
  3. Credit Reporting—Zillow then reports these on-time payments to Experian on a monthly basis. As for late payments (defined as those made outside that 30 day grace period), Zillow does not report those. 
Zillow-new-reporting-system-for-renters-Jan-2024

Source: Zillow

Renters enrolled and opted into the program are not required to take any further action to ensure their on-time payments are reported every month. And they can opt out of the rent reporting service at any time. 

The point of this new feature is to make it easier and more efficient for renters making on-time monthly payments (or something in the neighborhood of “on-time”) to build or enhance their credit—as well as to make Zillow the preferred rental platform for credit-conscious consumers. 

The question on this writer’s mind is how long before other rental platforms offer the same service for renters—especially in areas where Zillow has far fewer rental options?