The Pinch app is a rent payment program which can help strengthen your credit score by having rent payments recorded on your credit report as an installment loan (similar to a car or mortgage loan). Simply pay your rent payments as usual and submit proof of payment to Pinch who will then have your credit report reflect the payment. This can potentially increase your credit score.
The site is primarily targeting those who are underbanked and don’t have much credit history. But I think many of us can gain from this in a real way: 10% of your FICO score is based on your credit mix. A healthy mix of revolving credit lines (e.g. credit cards) and installment loans (e.g. mortgage or car loan) can give a real boost to your credit.
We once wrote about the Shared Secure Loan installment loan trick. I did that trick myself and saw a solid 50-60 point jump in credit score a few months later which I attribute to the installment loan (my score jumped from around 760 to around 820). That trick still works in theory, but in practice we don’t know which bank or credit union to use to get it to work since Alliant stopped allowing it (though it’s possible to do the same trick with a non-secured loan and swallow the hard pull or do the trick with other banks).
As far as I can tell, this Pinch app should have the same affect as the Shared Secure Loan trick since it adds an installment loan to your credit mix. It’s not too useful for someone who has a current mortgage, car loan, or other type of installment loan, but if you only have revolving credit from credit cards, the Pinch app might be able to give your score a significant boost. And, of course, Pinch can also be extremely helpful for a credit newbie or someone trying to rehabilitate their credit.
Update: As mentioned by some readers in the comments, it seems these rent payments will only help your score with the FICO 9 scoring model. Most banks use FICO 8 or earlier model (and that doesn’t seem to be changing any time soon) so this trick won’t really help your score, currently, to get a typical mortgage or credit card. 🙁
I also see now in the FAQ that they only report to Transunion, not to all Experian and Equifax. There is an option to get reporting to those as well, but only if you have Pinch mail the check for you, not by simply sending a picture of the check. That option may not work for a lot of people, leaving only Transunion getting reports which makes Pinch way less useful.
Pinch sounds like a fantastic route to help build credit. I don’t know how they make money, possibly from data aggregation or maybe from their paid offering for property managers. Pinch is also looking at having utilities or cell phone data reported on the credit report.
Just keep in mind that you do need to give in your name, address, DOB, and SSN, as well as your lease, to use the service. You’ll also apparently have to link your bank login so that they can verify the rent payment (I’m not sure how this works since they list money order as one of the acceptable rent payment methods, and that wouldn’t necessarily be visible in your bank login; also not sure why they can’t just use a copy of the check to verify).
If you want to buy me a coffee, input my referral code: XX6RN – they’ll give the option to input a referral code during signup (I’ll get $10), thanks! As far as I can tell, there isn’t any bonus for the new member.
Big thanks to reader Mnml (here’s their travel website link) for letting us know about Pinch.
