Gen Z and Millennials are pivotal players in the rental market, making up about 23% and 35% of renters respectively. However, a new Zillow survey, conducted by The Harris Poll,¹ uncovers a concerning trend: a gap in credit score awareness among these younger generations. This lack of knowledge isn’t just a minor oversight; it’s a barrier to achieving their financial goals. According to the survey, more than half (54%) of Gen Z and Millennial renters who reported a rental application being denied in the past attribute the rejection to a low credit score.
A revealing look at credit score awareness
The survey findings are eye-opening. While most young renters are on top of their daily expenses, their grasp on their credit scores is less firm.
- 94% of Gen Z or Millennial renters feel confident they know their monthly cell phone bill, 93% know their favorite streaming service’s subscription cost (Netflix, Hulu), and 92% know the price of their regular morning beverage (i.e. coffee or smoothie order).
- Only 79% are at least somewhat confident they know their current credit score, and less than half (45%) are very confident they know their score.
- The confidence dips further among Gen Z, with just 36% reporting that they feel very confident about their score, compared to 49% of Millennial renters.
This disparity in credit awareness is a critical hurdle in their journey toward financial stability and independence, since a low credit score can make it difficult to secure a loan.
Building credit with rent: Introducing Zillow’s rent payment reporting feature
The survey findings underscore a pivotal need: transitioning from mere awareness of credit scores to actively building and improving them. It’s not just about knowing your score; it’s about enhancing it through consistent, responsible financial behavior.
Renters in the U.S. spend hundreds of billions annually on rent, yet these substantial payments often aren’t reported to credit bureaus. Consumer Financial Protection Bureau data indicates around 26 million Americans are “credit invisible,” meaning they lack a history with major credit bureaus.
Zillow just announced a new rent reporting program designed to help address the need for credit building. Renters who pay rent through Zillow can now opt in to have their on-time rent payments reported to Experian. This feature enables renters to build their credit scores, making each on-time rent payment a step towards a stronger financial future.
How the program works
- Opt-In: Renters already utilizing Zillow for rent payments can enable rent reporting via their Renter Payments Dashboard on Zillow. New renters will be asked if they’d like to opt in during their onboarding.
- Payment Tracking: Once a renter opts into this service, Zillow identifies on-time rent payments, defined as payments made within 30 days of their due date.
- Credit Reporting: These on-time payments are then reported to Experian on a monthly basis. Late payments, defined as those more than 30 days past due, are not reported by Zillow.
Fostering financial readiness
Zillow’s rent reporting program goes beyond a mere rental service; it can be a tool for financial empowerment. Addressing the challenge of ‘credit invisibility,’ particularly in underserved communities, this initiative acknowledges renters’ fiscal discipline by incorporating rent payments into credit histories. This commitment reflects Zillow’s dedication to not only enhancing the renting experience but also empowering renters in their financial journey with practical, impactful tools.
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¹Zillow’s rent reporting program goes beyond a mere rental service; it can be a tool for financial empowerment. Addressing the challenge of ‘credit invisibility,’ particularly in underserved communities, this initiative acknowledges renters’ fiscal discipline by incorporating rent payments into credit histories. This commitment reflects Zillow’s dedication to not only enhancing the renting experience but also empowering renters in their financial journey with practical, impactful tools.