Rent-A-Center offers rent-to-own services. They allow you to temporarily lease furniture and electronics and gradually make payments towards them—renting them in the short term and eventually paying them off completely, at which point you’ll own them.
Because rent-to-own contracts feel like payment plans, which often build credit, it’s natural to wonder whether Rent-A-Center will do the same. Unfortunately, the answer is no; Rent-A-Center never builds your credit. However, it can hurt your credit if you fail to pay your bills on time.
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Why doesn’t Rent-A-Center build credit?
Your Rent-A-Center payments won’t contribute to your credit score because a rent-to-own contract isn’t a type of credit account.
Credit always involves borrowing money with the understanding that you’ll pay it back later. When you take out a line of credit, your creditor will report your payments to the credit bureaus that create your credit reports, which means they’ll be included in the information that’s used to calculate your credit score.
Although getting an item from Rent-A-Center feels a lot like borrowing, it’s technically leasing, just like renting an apartment from a landlord. You’re paying for your use of the item upfront, albeit on a month-to-month basis.
This doesn’t count as a type of credit, at least as far as the credit bureaus are concerned. That means Rent-A-Center won’t report your payments to them, so they won’t affect your credit score.
Can missing Rent-A-Center payments damage my credit?
Yes, missing payments on something you’re leasing from Rent-A-Center can damage your credit score. However, this happens in a slightly indirect way, and it won’t happen immediately.
Because Rent-A-Center isn’t a creditor, they aren’t considered a “data furnisher,” which means they don’t report any information to the credit bureaus at all. Consequently, in contrast to actual credit accounts, if you miss a payment on your Rent-A-Center item, it won’t affect your credit right away. You won’t receive a corresponding derogatory mark (such as a late payment) on your credit report.
Instead, Rent-A-Center will pursue other methods to collect the money you owe them (or get the item you rented back). They can be extremely aggressive; their collection agents may call you frequently, threaten litigation, or come to your home and try to repossess the item by force.
However, if these methods fail—if you owe Rent-A-Center a large debt that they fail to collect on their own—they might hire another company called a debt collection agency to collect it for them.
Debt collection agencies hurt your credit score
If Rent-A-Center transfers your debt to a collection agency, it will probably hurt your credit. Unlike Rent-A-Center themselves, most debt collectors are data furnishers, and they report the debts they’re trying to collect to the credit bureaus.
If they do, a very damaging negative mark, known as a collection account, will appear on your credit report. Debts in collections can lower your credit score by up to 100 points (depending on several factors, including what your score was to begin with).
Note that this scenario isn’t specific to Rent-A-Center—this is something that can happen with any severely overdue debt. Needless to say, you should avoid this outcome if at all possible. Always stay on top of your debts, and avoid taking on debt that you’re afraid you might not be able to pay off on time.
Is using Rent-A-Center a good idea?
No, using Rent-A-Center is usually a bad idea. Although they’ll only hurt your credit if you fail to pay them on time, they mark up all of their furniture and electronics significantly, meaning you’ll pay much more for them than you would have if you’d just bought the items outright.
These steep markups can make it harder to make your payments, opening you up to Rent-A-Center harassment (and potentially to damage to your credit score).
Rent-A-Center’s past controversies
There are also reports of Rent-A-Center engaging in shady and deceptive business practices.
On their profile with the Better Business Bureau, Rent-A-Center has a very low 1.2 consumer rating, and more than 1,850 customer complaints from the past 3 years.
Rent-A-Center also recently faced an investigation from the California Attorney General alleging that they engaged in “deceptive and unlawful tactics to pad [their] bottom line.” 1 The Consumer Financial Protection Bureau (CFPB) has also investigated Rent-A-Center’s business practices. 2
Rent-A-Center poses a significant risk to your credit and finances. Even if you don’t miss any payments or run afoul of their collectors, you just won’t get a very good deal on the items you rent from them.
Alternatives to Rent-A-Center
Since it’s best to avoid Rent-A-Center, you should look into some of the alternatives. There are plenty of these, and unlike Rent-A-Center, many of them also build credit.
You should consider:
- Buying furniture on credit: Using your credit card to make large purchases can also be risky (credit cards have high interest rates, which means it’s expensive to carry a balance on them from month to month). However, they’re a great option if you can pay off your credit card in full after purchasing the item that you want.
- Taking out a personal loan: Applying for a loan takes more time and effort than using a credit card, but they come with much lower interest rates. If you’re planning on making a series of large purchases that will take a while to pay off (e.g., you just moved into a new apartment and you need to furnish it), this is a solid option.
- Borrowing extra on your mortgage: If you’re looking to furnish a new home, most mortgages will allow you to borrow extra to pay for furniture, renovations, or closing costs. This will almost certainly be at a lower interest rate than other borrowing methods, but keep in mind that you will still need to pay the services back eventually.
- Buy now, pay later: Buy now, pay later (BNPL) companies offer short-term payment plans on retail items. These sometimes come with very attractive 0% interest rates, although unlike many of these other options, they don’t always build credit. This is the case for Klarna, one popular BNPL company. Klarna doesn’t build your credit, and neither do the majority of their competitors.
- Paying upfront or waiting: If none of these options work for you, then you should just pay for your items upfront—and if that isn’t a realistic option, just wait to purchase them. The extra money you’ll pay towards your furniture with Rent-A-Center is almost certainly not worth it.
Alternatives to avoid
There’s also one option you should steer clear from: taking out a home equity loan or a home equity line of credit (HELOC). Also known as “second mortgages,” these are credit accounts that borrow against the value of your home.
Although these help you build credit and often have low interest rates, you risk losing your home if you fail to pay them back. This just isn’t worth it for the kinds of non-essential purchases that you can get from Rent-A-Center.
