You will be happy to know that the big property management companies are willing to charge you an extra per-month fee to report your rent payment history to credit reporting agencies.
To some extent, renting an apartment does take on some debt. You're basically being loaned the property in exchange for making interest payments.
> You will be happy to know that the big property management companies are willing to charge you an extra per-month fee to report your rent payment history to credit reporting agencies.
Which, to me, they should not be allowed to do. I'm yet to find a rental property that lets you pay rent in arrears, so there's absolutely no use of credit occurring.
Since it takes quite awhile to evict in most places if you stop paying (months to years), they've always got some degree of 'arrears' risk going on.
Not to mention you have the ability to literally burn down their property (even by accident) with no real way they can stop you, since you have the run of the place. At best they can try to lock you up afterwards, but if you do it right it would be nearly impossible to prove.
Having a tenant in possession is always a 'credit' risk.
None of which is 'credit' in the sense of a score. And the fact that you have PM companies doing it as a "value added service", for a fee of course, rather than in the normal course of business also shows how shady this is.
If it's credit, report it. Don't charge people a fee to do so. I'm actually fairly surprised the bureaus haven't forbidden this. And if I was a renter and this was being done to me as a condition of rental I'd be disputing the tradeline.
> they've always got some degree of 'arrears' risk going on.
That's not a default of an extended line of credit.
> Not to mention you have the ability to literally burn down their property (even by accident) with no real way they can stop you
That's your investment risk as a landlord and why you carry insurance, still has nothing to do with my creditworthiness. Like you say, "even by accident".
If credit is the concept of ‘I get back what I loaned out, plus agreed upon interest per the agreement’ all of the situations are 100% credit like. If you like it or not. And the credit score is all about if you’re a worthwhile person for a lender to lend money to.
Same reason some employers like to check your credit if they expect you to be handling their or their customers money.
A track record of following your agreements when other people’s money is at stake, in a way they can get what is agreed on at the end of the day is important to them - and to if they want to place their money or assets in your hands going forward. There are many ways for a loan, or tenant, to go south and be a bad deal for them.
If that is inconvenient for you, they’ll usually be happy to tell you to bother someone else instead. If they’re smart, anyway. Dumb lenders lose principal, and that’s death to them if they do it too often.
Personally I don’t write loans/notes or rent out property because I’m not interested in dealing with the manipulation or excuses. I do have excellent credit though. And have had people write private notes for some side projects of mine. YMMV.
Credit in the sense of credit bureaus is the extension of secured or unsecured credit.
You pay upfront for the use of a home/apartment/condo - you are not being extended any kind of credit.
For the same reason prepaid phones don't report to credit bureaus.
That corner cases exist where you might be out money through the fault - or not - of the tenant doesn't make it a credit instrument.
All of your examples are entirely understandable - they're just not credit.
That's why there are separate reporting agencies for tenants and evictions.
No matter how you slice it, you are not extending credit to anyone by renting your home.
> A track record of following your agreements when other people’s money is at stake, in a way they can get what is agreed on at the end of the day is important to them - and to if they want to place their money or assets in your hands.
Now you're trying to conflate doing a credit _check_ for prospective tenants (something I have zero issue with and is completely different to this) with "allowing property management companies to, for a fee of course, report your entirely-paid-in-advance rental / lease payments as credit arrangements in arrears.
Perhaps if you start billing your rent in arrears, there would be a case for this.
To wit, the fact that in some situations you might be out some money doesn’t mean you have extended someone credit.
> If credit is the concept of ‘I get back what I loaned out, plus agreed upon interest per the agreement’
By your argument if you lend me your car and ask me to fill it with gas/replace the gas I used and I don’t, you could report my default to a CRA. Somehow I don’t think that would work.
You are promising to keep paying them x amount of USD per month over time, in exchange for control of the asset and hence them taking on the risk of you trashing the place or that they could find someone willing to pay more during that time.
A loan has a risk to the principal that you’ll not repay it in full. A lease has a risk to the principal that you’ll drive down the value of the property or even destroy it. Same difference, approximately.
Both have the actual cost they’ll be worth less at the end of the term than they were beforehand, due to inflation and wear/tear.
The biggest difference between a loan and a lease is that instead of them giving you x amount of $ directly (aka exclusive control of that money), they’re giving you exclusive or semi-exclusive control of an asset they value at x amount of $.
And that the asset has an address attached to it, and you can live there.
To some extent, renting an apartment does take on some debt. You're basically being loaned the property in exchange for making interest payments.