Rent set to be included in credit reports
Experian, one of the UK's leading credit reference agencies, has announced the launch of its Rental Exchange service. It will allow tenants' payment history to be included in credit reports.
Tenants who pay their rent on time will welcome the news as it will boost their credit rating, helping them qualify for better credit deals. Potentially, the move may help renters get access to more competitive mortgage deals.
"With several million people living in privately rented accommodation, a significant percentage of the population could be missing out on mainstream, low-cost credit because lenders do no currently have a comprehensive picture of their financial track record," says Paul Vescovi, UK and Ireland managing director at Experian Credit Services. "The Rental Exchange will strengthen people's credit histories, helping them to access a wider range of credit deals."
Bad news for late payers
However, the move is bad news for anyone who misses, or is late, with a rental payment. The rental market has become hugely competitive in recent years and landlords and letting companies will no doubt use the information to find the most reliable tenants.
The key to making Rental Exchange a success will be "ensuring that consumers are well educated about the service," says Sian Williams, head of Transact, the National Forum for Financial Inclusion. "This will include making clear the impact that missing a rental payment could have on their credit rating."
Experian has stated that there will be safeguards in place to make sure tenants' credit records aren't affected by late payments of housing benefits. And if there is a genuine dispute over a missed rental payment the information won't appear on a tenant's record.
The credit rating agency also says landlords and letting agents will only have access to a potential tenant's rental payment history, and not the other financial information held on a credit report.
A report containing detailed information on a person’s credit history, a record of an individual’s (or company’s) past borrowing and repaying, including information about late payments and bankruptcy. It also includes all applications a person has made for financial products and whether they were rejected or accepted. Your credit report can be obtained by prospective lenders to determine your creditworthiness.