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Moving from renting to homeownership could get easier

Study shows benefits of adding renting into FICO scores

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Adding in rental history to a credit score could make all the difference for potential homeowners, according to an article in Businessweek.

Experian published an analysis on almost 20,000 people in government-subsidized housing who pay their monthly rent on time. The survey found that before adding in rental history, 11% of the same had no credit file at all, which makes it extremely hard to get loans. However, once the rental history was included, 59% of that group had prime credit scores, and another 38% had “nonprime” scores, while only 3% were considered subprime.

As reported back in June, mortgage lenders might start considering rent payment history in credit scores. In the current system, years of monthly payments to landlords do not show up on credit-bureau files. 

Two of the national bureaus — Experian and TransUnion — have begun incorporating verified rental-payment data into credit files where it can be included in the computation of consumers’ scores when they apply for a mortgage.

Source: Businessweek
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