Understanding Rent-A-Center's Business Model and Services
Rent-A-Center is a rent-to-own retailer that has operated in the United States since 1986. The company operates over 2,000 locations across the country and offers customers the option to rent household items, electronics, and furniture with the possibility of eventually owning them. Unlike traditional retail purchases where you pay the full price upfront, Rent-A-Center's model allows customers to make weekly or bi-weekly payments over time.
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The rent-to-own process works as follows: customers select items they want to rent, such as televisions, computers, furniture, or appliances. They enter into a rental agreement that typically lasts several months to a year. During this rental period, customers make regular payments. If they continue making payments until the agreement ends, they have the option to own the item. However, customers can also return items at any time without further obligation, though they forfeit any payments already made.
Rent-A-Center's pricing includes the cost of the item plus a rental fee. According to consumer data, the total amount paid through rent-to-own agreements can be significantly higher than purchasing the same item outright. For example, a television that costs $300 to purchase might total $600 to $800 when rented through a rent-to-own agreement over 12-18 months. This difference exists because the rental company factors in operational costs, delivery, maintenance, and the risk that customers may return items.
The company also offers additional services including same-day or next-day delivery in many locations, free maintenance and repairs during the rental period, and the ability to swap out items if they break down. These services are included in the rental payment, which explains part of the cost difference compared to traditional retail.
Practical Takeaway: Understanding that rent-to-own agreements cost more than traditional purchases is important for making informed financial decisions. Before entering any rental agreement, compare the total cost of renting versus purchasing the same item elsewhere to determine which option makes sense for your situation.
How Rent-A-Center Reports Information to Credit Bureaus
Rent-A-Center's relationship with credit reporting agencies is an important topic for customers to understand, as it can affect their credit history and credit score. Not all rent-to-own companies report payment information to credit bureaus, but understanding when and how this reporting occurs is valuable knowledge.
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Historically, Rent-A-Center did not report regular rental payments to the major credit bureaus—Equifax, Experian, and TransUnion. This meant that making on-time rental payments would not help build credit, and missed payments might not appear on credit reports either. However, if a customer defaulted on payments or failed to return merchandise, Rent-A-Center could report this negative information or send accounts to collections, which would then appear on credit reports.
In recent years, some rent-to-own companies have begun reporting positive payment history to credit bureaus through alternative reporting channels. These reports may be sent to specialty consumer reporting agencies that focus on alternative financial products. A customer should contact their local Rent-A-Center location or customer service to understand whether their specific rental agreement includes credit bureau reporting.
When negative information is reported, it typically appears in the payment history section of a credit report. A 30-day, 60-day, or 90-day late payment can remain on a credit report for seven years from the date of the delinquency. This can lower a credit score by 50 to 200 points depending on the severity and the individual's overall credit profile. A charge-off or collection account carries similar reporting timelines and impacts.
Customers should also be aware that Rent-A-Center may conduct a credit check or background check when opening a new rental account. Hard inquiries—which occur when a company reviews your full credit report—can temporarily lower your credit score by a few points. Multiple hard inquiries within a short period may have a more noticeable impact.
Practical Takeaway: Contact your Rent-A-Center location directly to learn whether your rental payments are reported to credit bureaus. If you're concerned about credit impacts, understanding this policy beforehand helps you make informed decisions about whether to use rent-to-own services.
Late Payments, Defaults, and Credit Reporting Consequences
Understanding what happens when rental payments are missed is critical for anyone considering a rent-to-own agreement. The consequences extend beyond losing the rental item—they can significantly impact credit history and creditworthiness.
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When a customer misses a Rent-A-Center payment, the company typically sends payment reminders and may attempt to contact the customer through phone, email, or mail. If payment is not received within a certain period—usually 7 to 14 days depending on the rental agreement terms—the account enters a delinquent status. At this point, Rent-A-Center may assess late fees in addition to the regular rental payment. These fees can range from $10 to $50 per occurrence, depending on the specific rental agreement and state regulations.
If delinquency continues for 30 days or longer, Rent-A-Center may report this to credit bureaus. A 30-day late payment on a credit report can reduce a credit score by approximately 50 to 100 points for someone with good credit. For those with poor credit, the impact may be less dramatic in percentage terms but still meaningful in practical terms. A 60-day or 90-day late payment carries proportionally greater consequences.
If a customer continues non-payment for an extended period—typically 60 to 90 days—Rent-A-Center may repossess the rental item. Repossession allows the company to retrieve merchandise without requiring a court order in most states. Once repossession occurs, any remaining balance is often charged off, meaning the company writes it off as uncollectable. This charge-off is reported to credit bureaus and significantly damages credit scores.
In some cases, Rent-A-Center sells unpaid accounts to collection agencies. Collection accounts appear on credit reports and can remain for seven years. Collection agencies may pursue payment through calls, letters, or legal action. State laws vary regarding the timeframe in which companies can pursue collection, but the reporting impact is substantial regardless.
Some state consumer protection laws limit Rent-A-Center's ability to report certain information or may require specific processes before repossession. Customers in states with strong consumer protections may have additional recourse, but understanding these protections requires research into state-specific regulations.
Practical Takeaway: If you cannot make a rental payment, contact Rent-A-Center immediately to discuss options rather than simply missing payments. Many companies offer payment extensions, modified schedules, or other arrangements that may prevent reporting to credit bureaus and repossession.
Positive Payment History and Building Credit Through Rent-A-Center
While traditional rent-to-own agreements from Rent-A-Center historically have not built credit through on-time payments, understanding the current landscape of credit reporting in the rent-to-own industry can inform financial decisions.
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As of recent years, some rent-to-own companies have partnered with alternative credit reporting agencies to report positive payment information. These agencies specialize in non-traditional credit products and may include rent-to-own payments in alternative credit files. However, this information typically does not appear on the traditional credit reports used by most lenders, banks, and credit card companies.
If a customer is interested in building credit history, they should clarify with Rent-A-Center whether their account includes reporting to traditional credit bureaus or only to alternative agencies. Making on-time rent-to-own payments may eventually appear on alternative credit reports but is unlikely to directly improve a FICO score, which is the credit score most commonly used by traditional lenders.
For individuals looking to build or rebuild credit, rent-to-own agreements offer limited credit-building opportunities compared to other options. Secured credit cards, credit-builder loans from credit unions, and being added as an authorized user on someone else's credit card account are alternative strategies that may be more effective for credit building. However, if someone cannot access these traditional credit products due to poor or no credit history, making consistent on-time rent-to-own payments demonstrates financial responsibility, which may be valued by some alternative lenders even if not reflected in a FICO score.
The absence of positive reporting for on-time payments means that Rent-A-Center rental agreements create an asym