Reliable renters could get a mortgage-boosting credit score upgrade

Trustworthy tenants can now see their timely payments contribute to their credit score for the first time

It may seem obvious but a new scheme aims to put emphasis on good tenants when it comes to credit rating, which could help you get a foot on the property ladder.

The Rental Exchange Initiative, a partnership between Big Issue Invest – the social investment arm of the Big Issue – and Experian’s CreditExpert will see rent payments taken into consideration for the first time ever with no cost to either the tenant or landlord/housing provider.

Over 150 social housing providers, local authorities and letting agents have agreed to report data concerning rental payments to a central system to help prove people can afford mortgage repayments.

Experian says that under the new system as many as 79% of tenants (1.2 million people) could see their credit scores improve.

Clive Lawson, managing director of Experian Consumer Services, said: “Adding rental payment data to credit reports would help millions of people prove their identity so they can access online services and mainstream finance. We’re already working with a range of lenders who want to use rental data to improve their understanding of a person’s financial situation so they can make higher quality decisions.”

A fairer playing field

The news follows a petition last year that gained nearly 150,000 signatures that asked the government to consider changing the law to ensure tenants that paid their rent on time were not penalised when it came to applying for mortgages or other forms of credit.

The issue was debated in the House of Commons and although the government response afterwards was that rent payments alone were not enough to demonstate the ability of someone to repay a mortgage, some people believe it is a step in the right direction.

John Montague, managing director of The Big Issue Group, commented: “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. The Rental Exchange has succeeded in making more inclusive data available to credit service providers, and it is this data which has the potential to reduce levels of financial and digital exclusion and improve the circumstances of some of the poorest in our society.”

How can landlords participate?

If you would like your rent payments to be added to the system, ask your housing provider to sign up to the scheme, which is totally free.

Private landlords who want to incentivise their tenants to pay their rent on time every month and encourage longer tenancies can sign up through one of the Rent Exchange’s partner organisations. It is also a useful system for assessing the rental reliability of future tenants (though you must tell them you are sharing their data in this way).

In addition, Experian is working with tech providers within the private rental sector to enable tenants to self-report data.

Photo: Wei Huang/Shutterstock