I just paid off a house that I got on land contract. How do I add it to my credit report?

Submitted by Renee K.

This is a great question. Before your question, no one has ever asked me about this, so thank you for letting me get this info out! I consulted with my friend and colleague Tina Marie, who knows a lot about land contracts.

What’s a land contract?

A land contract is an agreement between a buyer and seller. The buyer purchases property directly from the seller without the involvement of a bank.

Benefits of a land contract

For some people, a land contract is a great option for purchasing a home if they can’t get a traditional mortgage. It can let you buy a home while showing on your credit report that you don’t have as much debt in comparison to your income. This is called debt-to-income ratio.

Drawbacks of a land contract

On the flip side is the reality that the payments you make go directly to the seller instead of a bank. This means your payments may not be reported to the credit bureaus. You may miss out on the benefit of building an on-time payment history with the payments you make. You might think that as long as you have a record of your payments and the seller agrees with you, then you can report this payment history to the credit bureaus yourself. Unfortunately, that’s not the case.

Getting your payments reported to the credit bureaus

You are not able to report the payments to the credit bureaus. Only the creditors can report. That means you’re at the mercy of the seller in this situation. You can ask the seller to report your payment history to the credit reporting agencies. That would allow the payments to be added to your credit report.

But, more often than not, individuals who act as creditors in a land contract arrangement do not report payment history because they have to pay a fee to register with the reporting agencies and report payments. Consider negotiating with the seller. It may be to your benefit to offer to pay the fee if they are unwilling to do so.

Even if your credit report doesn’t show the payments, be proud of yourself for taking on the challenge of paying for your home and making all the payments so that you own it outright. That feeling of freedom can’t come from your credit report.

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