Can Leasing an Apartment Help Increase Your Credit Score?

When a person takes out a lease on an apartment, he signs a contract agreeing to pay the landlord of the property a certain amount of money over a certain period of time in exchange for use of the property. While this contract may resemble a loan in some ways, tenants generally pay for a lease upfront and do not receive use of the apartment on credit. Renting an apartment generally does not increase a person's credit score.

Credit Scores

Credit scores are computed through information related to your lending history. If you are late paying back loans or incur large debts, your score will go down. If you pay back your loans on time, your score will go up. If you take out a lease on an apartment, this information will not be reported to a credit reporting agency, as it is not a loan. Therefore, this leasing will not increase your credit score.

Credit Checks

Often, before a landlord will lease a residence to a prospective tenant, the landlord will ask to check the tenant's credit history to get a sense of whether the tenant is financially viable and whether he pays his debts on time. It is a common misconception that a credit check run by a landlord will hurt your score. In fact, only credit checks by lenders to whom you have inquired about rates will hurt your score, and then only by a few points.

Delinquent Payments

Although a lease is generally not reported to a credit reporting agency, it may be if you fall behind in payments. Generally, tenants are required to pay a lease in advance. However, if you fall behind in payments and continue to occupy the property, the landlord may attempt to collect payment through a collection agency. When this happens, this collection account is noted on your credit report. Such an account will always hurt your score.

Credit Cards

The only way that leasing an apartment could have a positive effect on your credit score would be if you were to pay for the lease through a line of credit, such as a credit card, and then pay off this loan on time. A consistent history of paying back loans on time will result in a higher credit rating, as credit rating agencies take this consistency as a sign that you are credit worthy.