‘On-time’ renters get better credit score
Hundreds of thousands of people who pay their rent on time are set to benefit from better credit scores.
Credit reference agency Experian said it was now taking account of the payment habits of 1.2 million tenants.
The vast majority of those – some 79% – stand to improve their credit scores and so get better access to bank accounts, loans and mortgages.
Until now, most renters have not been able to prove that they are likely to meet their monthly mortgage payments.
Last year, nearly 150,000 people signed a petition demanding better recognition of tenants who pay their rent on time.
A debate on the issue was held in Parliament.
Afterwards, a Treasury minister, Stephen Barclay, said loan providers should look more favourably on those who kept up to date with their payments.
Some 150 social housing providers have signed up to the scheme so far, called the Rental Exchange.
As a result, most of those currently affected rent from housing associations or local authorities.
However, those who rent from private landlords via letting agents can ask to have their payment data sent to the site.
Nevertheless, anyone who has a poor record of paying rent on time could see their credit scores adversely affected – making it harder, or more expensive, to access other financial services.
“Tenants pay a significant amount of money each month for the roofs over their heads, so it’s right to recognise these regular payments in a similar way as mortgages,” said Clive Lawson, managing director of Experian Consumer Services.
The Rental Exchange has been developed with the help of Big Issue Invest, the social investment arm of the Big Issue group.
John Montague, the group’s managing director, said, “We set out with the aim of creating a fairer playing field for people accessing credit, because we recognised that people in poverty were routinely penalised.”
Those already signed up to the scheme can see their credit reports here.
Read more: https://www.bbc.co.uk/news/business-45956793