PHILADELPHIA, PA — As mortgage rates move above 7 percent and new home construction slows, many would-be buyers are finding that ownership is harder to reach. In Philadelphia, where Zillow says the region is short 80,675 homes, renters are staying put longer and looking for practical ways to strengthen their financial profile.
One option getting attention is rent reporting. Instead of letting monthly housing payments disappear from a credit file, these tools can turn on-time rent into a record that may help when a renter applies for a loan. Financial experts say the idea is especially relevant now, because rent is often a household’s biggest bill even though it usually does not appear on a credit report.
Why rent payments matter when credit history is thin
Zillow says about one-third of mortgage applications are denied because the borrower lacks enough credit history. That can be a problem for renters who pay on time every month but do not see those payments count toward their score.
Mischa Fisher, Zillow’s chief economist, said renters should look at these tools as a way to capture credit they are already earning. His point is that a long record of on-time housing payments can help consumers clear a credit-score threshold and potentially qualify for better loan terms later.
The timing matters because higher rates and a tight housing market can make every percentage point count. Even a small improvement in credit standing may affect whether a borrower qualifies at all, or how much monthly room they have left after paying for housing and other bills.
How Zillow Payments works for renters and landlords
Zillow Payments is one of the programs available to help renters build credit. The company says the service reports rent payments to the three major credit bureaus, and it can be offered by any landlord through Zillow Rental Manager.
Tenants have to opt in, but Zillow says the program is free for both sides. That makes it a low-friction option for landlords who want to offer it and for renters who want the monthly payments they already make to show up in a credit file.
Zillow also says it reports only on-time monthly rent payments. Under that structure, late or missed rent does not hurt a renter’s credit score through the program, which is different from products that record both positive and negative payment behavior.
Fannie Mae and Experian offer other paths to credit
Zillow is not the only place renters can look. Fannie Mae allows lenders, with the borrower’s permission, to use 12 months of positive rent payment history when evaluating a mortgage application. That can help renters turn a year of steady payments into something a lender can count.
Experian has a similar service called Rent Bureau, but the company’s system reports both positive and negative data. In practice, that means late or missed payments can also be reflected in the credit record, making the tradeoff different from Zillow’s approach.
For renters comparing options, the difference is important. Some tools are designed to add good payment history only, while others can show the full picture. The right fit depends on whether a renter wants a safer credit-building path or a broader reporting setup.
Zillow’s Credit Climb charges a fee for a longer lookback
Zillow also offers a second product called Credit Climb. The company says it can provide credit for up to two years of rent payments, but renters must pay a $20 fee to use it.
That makes Credit Climb a different kind of option from Zillow Payments. Instead of relying only on the landlord’s participation and the tenant’s opt-in, it gives renters a way to get more of their rent history counted, though it comes with a direct cost.
For households trying to manage rising housing costs, the price may still be worth considering if the added credit history improves the odds of qualifying for a mortgage or reaching a lower rate. Fisher said stronger credit can translate into more discretionary income at the end of the month.
What stronger credit can mean for monthly budgets
The financial upside of credit-building is not just about getting approved. Fisher said reaching a better credit score can help borrowers secure a lower payment, which leaves more room in a monthly budget.
That matters in a market where housing costs are already under strain. A renter who can move into a stronger credit tier may have a better shot at qualifying for a loan, and possibly at avoiding a payment that stretches the household too far.
For people who are not ready to buy now, rent reporting still offers a way to prepare. The basic idea is simple: if housing is already one of the biggest bills most families pay, the payment should work harder for them by building a record they can use later.
A local housing shortage keeps pressure on would-be buyers
Zillow’s latest analysis says Philadelphia is short 80,675 homes, a gap that helps explain why many renters are staying renters longer. Limited supply, slower construction and higher mortgage rates all push the market in the same direction.
That combination can make credit quality even more important. When there are fewer homes to choose from and borrowing is more expensive, applicants with stronger files may have an edge in qualifying for financing and managing the costs that come with it.
Rent reporting does not solve the shortage, and it does not lower mortgage rates. But it gives renters a tool that can make their existing payments count, which may matter more now as households look for any way to improve their standing in a tight market.
More on what homes, rents and new builds are doing near you, on RHS Commoner.
