By the end of 2012, tenants will have details about their rental payments included in their credit file under an initiative launched by Experian, one of the UK’s three credit reference agencies.
Under the new scheme, tenants who consistently pay their rent on time will benefit from an enhanced credit rating, thus boosting their chances of being granted mortgages, loans, credit cards and future tenancy agreements. Conversely, tenants who have paid their rent late will find that their credit score falls – something that will show up on future credit checks by banks, landlords or letting agencies.
Tenants living together under a joint tenancy agreement will also have to keep on their toes, as late joint rent will also count against them, regardless of who is to blame.
Reaction to the announcement has been mixed, with experts coming out both for and against the proposal. Quoted in The Guardian, Sian Williams, head of Transact, said “this could be a very useful tool for allowing [renters] to access a wider range of services at a more affordable cost.” She concludes that it 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.”
Dan Plant, a money analyst for MoneySavingExpert.com, is rather more reserved in his reaction to the initiative: “This adds to the ever-expanding pool of information banks can use to make a snap judgement about you, and it’s not even about how you’ve previously borrowed money. This makes it absolutely crucial you pay your rent on time, and regularly check credit files to make sure everything that’s reported is true – and if not, get it put right.”
Experian is now beginning the process of talking to major letting agents and landlords to encourage them to state in tenancy agreements that they can share tenants’ payment history. If successful, the data should start to appear by the end of the year.
At Reside, our tenants are referenced through Endsleigh, a branch of of Experian.
