Many homeowners will be well aware that prompt payments of their mortgage is potentially a way of helping them prove their creditworthiness for the best deals ñ after all, a mortgage is a form of borrowing credit, and should be shown like so on your credit report.
Those millions living in private rented accommodation have, until now, not had that privilege. While information about mortgages is included on credit reports, rent payment information currently isnít.
Effectively, private renters who meet their rent payments on time wonít see this positive information registered on their credit report ñ but this is set to change.
Experianís new Rental Exchange will allow tenantsí payment histories to be included, with their permission ñ potentially strengthening their credit history and subsequently helping them qualify for more and lower-cost credit deals. Equally of course, landlords could benefit from tenants having even more motive for paying rent on time ñ as should they be consistently late with rental payments, it may now adversely affect their credit report.
Different for Landlords
You can see this data on your credit report, but one crucial point is that landlords and lettings agents can only see your rental payment history ñ they wonít be able to see your other payment history, which might have had a bearing on whether they would choose you as a tenant. Banks and other lenders will however be able to see the full report.
Moving up the property ladder
The potential is there for people looking to get onto the property ladder for the first time to boost their credit histories, as lenders will be able to more easily verify their full borrowing history. A good credit history is vital if you are looking for a good mortgage deal. You can get unlimited Experian Credit Scores, and see your Experian credit report for free, with a 30-day trial of CreditExpert.
Credit reports strengthen your identity
Many financial organisations rely on electronic identity checks based on peopleís credit reports. Stronger credit reports will help more people successfully satisfy these checks, avoiding the need to resort to slower, paper-based methods.
Sian Williams, Head of Transact, National Forum for Financial Inclusion, welcomed the news, saying: ìThis is a very welcome development for many people living in private rented accommodation who until now have often found it difficult to build a credit history. If used well, this could be a very effective tool for allowing them to access a wider range of services at a more affordable cost.î