Tenants Rental Payment and Credit Scores
One of the big complaints of tenants is that their credit score is not improved by all the rental payments they make says David Lawrenson of www.LettingFocus.com. However, this is about to change.
Both private renters and social housing tenants can now opt in to the new, free “Rental Exchange Initiative” which will record rental payments on their Experian credit file.
Apparently, the scheme has actually been running in the background (for those who’ve already signed up) for more than two years with an estimated 1.2 million renters’ payments recorded. From now though, those payments will become visible in people’s files. New joiners will be added as they join up.
As landlords get access to this information too, this could make it easier for those who pay their rent on time to rent properties from you.
The estimate from Experian is that around 80% of tenants already signed up will see a noticeable improvement in their credit score.
Tenants Rental Payment and Credit Scores – The Rental Exchange
The Rental Exchange scheme was launched by credit reference agency, Experian together with The Big Issue Group in March 2016 as a way of allowing tenants to build up a credit history and improve credit ratings by paying their rent on time each month.
Rental payment history is used in the same way as mortgage payment data, so for those signed up, their payments will be recorded and added to their credit file.
Before Rental Exchange started, renters were unable to show they could meet regular payments. This was especially so for those who didn’t already have any other credit product.
Already, more than 150 social housing providers, local authorities and letting agents are reporting data into the Rental Exchange scheme. For tenants that rent from private landlords, they may ask you to join the scheme.
Experian is the only credit agency to record rental payments so far. Equifax and Callcredit don’t currently take them into account.
Tenants Rental Payment and Credit Scores – Why does it matter?
Making payments on time (which 98% of private tenants do, according to Experian) could see tenants’ credit history improve, therefore making it easier to prove identity and apply for credit products and indeed, to rent other properties.
Landlords will welcome this as a useful tool to better gauge a tenant applicant.
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This is very interesting to know. Thanks for sharing. Often, the reason I use estate agents to rent my property is because I’ve felt they had better credit checks facilities. But i will check this services out.