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Paying rent on time can improve your credit score

Oct 24, 2018

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By Esmée Hardwick-Slack

 Paying rent on time improves credit score

 

Last year, around 150,000 people signed a petition demanding better recognition of tenants who pay their rent on time. After the issue was debated in parliament, a Treasury minister, Stephen Barclay, said loan providers should look more favourably on those who keep up to date with their payments.

Credit reference agency Experian has now said it is taking the rent payment habits of 1.2 million tenants into account. About 80% of tenants now stand to improve their credit score, which will allow them to have better access to bank accounts, loans and mortgages.

Head of consumer affairs at Experian, James Jones, said: “This is an important step in getting tenants recognition for meeting what in many cases is their biggest financial commitment – monthly rent – on time.”

More than 150 social housing providers, letting agents and local authorities have signed up for the Rental Exchange scheme and reported data about rental payments. Until now, this information has been invisible, however, credit companies will now be able to look at rental payments in the same way they would view a homeowner’s mortgage contributions.

The scheme has been developed with the help of Big Issue Invest, part of the Big Issue Group.

The groups managing director, John Mortague, said: “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, is 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?”

The scheme is tenant-centred, everyone on the program must consent to it. Private tenants can opt in through letting agents, 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.

 

What are your thoughts on the Rental Exchange? Let us know in the comments or join the conversation on Twitter.

 

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