Paying your rent on time could now help you improve your chances of getting a mortgage thanks to a new development in the credit reference industry.
Experian has announced rental payment information will appear on the credit reports of more than 1.2 million tenants across the UK. This will provide evidence to mortgage lenders they can meet payments.
Until now, regular and timely payment of rent has not been recorded on tenants’ credit reports. So while there were rewards for keeping on top of bills and credit cards and making mortgage payments, there was no way for people to gain recognition for making the rent.
But thanks to the Rental Exchange initiative, developed in partnership with the Big Issue Invest, tenants can now see their rental payments on statutory credit reports as well as Experian’s CreditExpert.
Last year a petition calling for rent payments to be used as proof people could afford a mortgage gathered nearly 150,000 signatures.
Credit score boost
In fact, Experian said, taking rental data into account will mean 79% of tenants would see a noticeable improvement in their credit score.
And it said analysis proved by adding rental data to credit reports more tenants would be able to prove their identity online, something which will broaden the range of financial services available to them.
Having a good credit rating will not only improve potential homebuyers’ chances of getting a mortgage it can also provide them with access to better deals.
Rewarding renters
Clive Lawson, managing director of Experian Consumer Services, said it was proud Experian had become the first credit reference agency to add rental payment data to credit reports.
He added: “Tenants pay a significant amount of money each month for the roofs over their heads, so it’s right to recognise regular payments in a similar way as mortgages.
“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.”
