Boost for tenants as rent payments included in credit scores
Records of rental payments are now being included in credit reports, meaning tenants could find it easier to access mortgages and other loans.
Experian, one of the main credit referencing agencies, announced this information now features on the reports of more than 1.2 million tenants across the UK.
It is hoped the details will make it easier for tenants to build a credit history and jump on to the property ladder if lenders can see they have a good reputation of keeping up with payments.
James Jones, head of consumer affairs at Experian, told Sky News: “This is an important step in getting tenants recognition for meeting what in many cases is their biggest financial commitment – monthly rent – on time.”
The firm has said more than 150 social housing providers, letting agents and local authorities have reported data about rental payments as part of the “rental exchange” initiative, developed in partnership with Big Issue Invest.
Until now, that information has been invisible. But now, credit checking companies will be able to look at rental payments in the same way they view a homeowner’s regular mortgage contributions.
Mr Jones says about 80% of tenants on the scheme should see their credit scores boosted, and will find it easier to access financial services, monthly contracts and loans.
He said: “People who don’t have very much credit history can struggle to have even their name and address confirmed.
“For social housing tenants particularly, this will mean more successful ID checks, allowing them to get better deals, helping them get mainstream credit, and moving them away from higher costs.”
Being able to provide evidence of credit history is required for taking out a loan, getting a credit card, opening a bank account or trying to get a mortgage, among other services.
At the moment, the main way of boosting your credit score is to take out a loan and keep up with repayments, John Montague, managing director of the Big Issue Group said.
He told Sky News: “It strikes me as barmy that the only way we can improve our position for the day when we need to take out some debt, it to take out some debt.
“We thought there must be a better way. What else can we do to improve people’s position in life, to show that they’re responsible people?”
Mr Montague said that most people are unaware of the way credit checking works, and highlighted the importance of education on what our data is used for.
He said the scheme is tenant-centred, and that everyone on the program has consented to the scheme.
Private tenants opt in through letting agents or their landlord, or self-report.
For social tenants, the scheme currently works under an opt-out basis – with housing associations submitting information and tenants informed of the choice to take part.