Rent to build credit score


#1

Are you a tenant? Do you pay your rent on time? If so, read on…

A tenants largest expense is most likely to be rent. What surprises most tenants is that currently, this DOES NOT count toward their credit score.

What I could see is the ability for someone to add their rental payments and opt into having them reported to a Credit Reference Agency via an integration with a company such as CreditLadder. The CreditLadder reporting service is free. This, in turn, would help to build their credit score through their Starling account and as a result, provide them better deals and savings when seeking credit agreements for mobile phone contracts, white goods, a car or a home.

Background

Rewind a couple of years and The Big Issue Invest (their investment arm) partnered with Experian to create The Rental Exchange following the success of the established Rental Bureau in the USA. The idea is for social and private tenants in the UK to have rent reported helping with identity checks and allowing for access to better credit. Whilst they have been successful in helping 2m social tenants it is now the turn of private tenants. CreditLadder is recommended by Experian for tenants to report their rent and make it count towards their credit file. See: http://www.experian.co.uk/rental-exchange/tenants.html

What are your thoughts on this concept?


#2

It’s a good idea but it’s Experian only?

Shame it’s not all 3 agencies.


#3

I’m skeptical about whether this would improve your chances of better credit deals. Lenders usually look to see how you have managed and repaid credit accounts in the past but rent is paid in advance and is not a credit account.

Note the website states “It’ll prove to companies that you’re a reliable potential customer by proving who you are and where you live.” Most people’s credit files already show who they are and where they live. I guess it could be useful to people who have just moved to the UK.


#4

It’s not really a new thing, a few years ago a number of big rental companies reported tenants payments to credit reference agencies, I no longer think they do though. However if a company doesn’t look at things like rental payments it has no real affect on your score. Automated credit systems won’t even know what a rental payment is when assessing things, only if its a manual check would it have an effect.

Social landlords I doubt would be interested in the extra cost of having to report payments, and then justifying that to tenants.

I get the principal, and it makes sense, its a big payment your rent, but until companies use that data, it is just a gimmick. Of course more people that sign up are going to encourage companies to use the information in the long run, but for me, its not worth it at the moment. Having to pay credit ladder, for them to pay my landlord, just seems a way for issues to arise, when in fact paying your landlord direct is simple.


#5

I think this is more for mortgage companies to check your record rather than a general credit check though?

So, trying to get a mobile phone - they probably wouldn’t care if you’re paying your rent on time.

However, trying to get a mortgage which will be £500 a month, then being able to prove that you’ve been reliably paying £550 a month in rent will make a difference.


#6

Mortgage companies haven’t cared about that information in the past, I’m not so sure they will care so much for a service that allows anyone to sign up and to pay anyone, and pretend its a landlord.

I see what you are saying, but the flaw is too big for any company to risk lending money on.

While they allow anyone to sign up for the service, it’s going to be so simple to fake the details, I’ll pay them £500 pay my other account £500 send a fake tenancy agreement, probably take me 2 mins to do.


#7

Hi Ben,

Currently it is only Experian that are taking rental data. As this becomes more prevelant I expect the others to follow suit. Experian is the largest of the credit agencies so not a bad start.


#8

Thanks for the feedback! Experian are treating this as credit and from Jan 2018 there will be a section in Experian statutory reports for rent. Why should you not show a record of your largest expense as a tenant?


#9

Great point. In fact, this can help with your score in general as well as proof for a future mortgage application. See the campaign by The Young Foundation (founded Which?) and The Big Issue - [https://www.facebook.com/Make-Rent-Count-1978838095737817/] They provide examples of purchases made with our without good credit


#10

I signed up to this service back in May 2016 via a loose endorsement on MoneySavingExpert. As yet, I do not believe any of my rental payments have been posted to my credit report. I check my Experian report regularly and there is absolutely no mention of my rental payments being made. I seem to recall reading somewhere any rental payments would only start appearing on reports from the beginning of 2017, well… we’re at the end of 2017 now and I still haven’t seen anything which is a bit disappointing.

Here are a couple of other observations:

  • Recently I have receive a couple of emails from CreditLadder trying to encourage sign-ups to chargeable plans which include Quido-esque kind of cashback schemes, a free coffee each month, and cinema and mobile phone insurances for £4.99 - £8.99 per month. So these are hardly good value schemes. Moreover, I’m unhappy that CreditLadder use renters’ details to try and flog additional services.

  • Last year, during a change of their banking partner, I received an email from them supplying a new sort code and account number to which future rental payments were to be made. The email could have come from anybody - there was absolutely no personalisation on it (no account number, address, even my name or a postcode) - nothing. Effectively it looked like spam.

CreditLadder are endorsed by Experian as the only firm selected to operate the Rental Exchange scheme. I am currently considering my continued use of the scheme.


#11

I am a CreditLadder customer, I signed up to their ‘value add’ service at the same time as their rental reporting service, so didn’t have the issue of then attempting to flog the service to me.

Having said that, I have found the service good value for money, especially the phone insurance, I get my free coffee, I get my £5 cinema tickets from them and I recently smashed my phone screen, so that has saved me £250 after the excess as well, so I would recommend them.

Surely the ‘flogging extra services’ can only come after you haven’t unchecked the marketing email flag on sign up, otherwise they are breaking data protection law? Most companies will send you info on new services as they launch them…


#12

As an update - we expect to be working with other Credit Reference Agencies this summer :slight_smile:


#13

We now support Starling users to have rent read from their account! All performed through an FCA regulated partner so rest assured this is safe and secure. Sign up, connect your bank and we report to Experian monthly. Improving your credit history overtime.

Choose Option 1 on sign up https://www.creditladder.co.uk/tenants then Starling as your bank. Any questions about sign up you can get me on help@creditladder.co.uk.

Thank you,
Asa


#14

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