Tenants rent payments now contributing to credit scores
29 Oct 2018
- Want to buy a property?
- Have you saved for years avoiding credit and store cards in the hope of owning your dream home?
- Struggling to get a mortgage agreed because you have little to no credit?
- Mortgage lenders finding ways to not lend you money because you don't have a top credit rating?
There is now another way to boost your credit rating if you are currently renting. Records of rental payments are now being included in credit reports, meaning tenants could find it easier to get a mortgage. Experian, who is one of the main credit reference agencies, announced this information now features on the reports of more than 1.2 million tenants across the UK. The newly added information will aid in making it easier for tenants to build a credit history and jump on to the property ladder if lenders can see they have a good reputation of keeping up with payments. James Jones who is the head of consumer affairs at Experian told Sky News in an interview "This is an important step in getting tenants recognition for meeting what in many cases is their biggest financial commitment - monthly rent - on time." Until now the information around rental history has been invisible. Now credit checking companies will be able to look at rental payments in the same way they view a homeowner's regular mortgage contributions.
Experian estimates 80% of tenants will see their credit score increase making it easier to get mortgages.
If you know your credit score but have no idea what it means (like me) the chart below will help!
You could be in line for the best mortgage deals with lower interest rates
881 - 960
You could get most but not all the best mortgage deals
721 - 880
You could get good mortgage deals with reasonable interest rates
You may get mortgage deals, but with higher interest rates
You may be declined a mortgage or find it harder to get one without very high interest rates.
Being able to provide evidence of credit history is required when taking out a loan, a credit card, opening a bank account or trying to get a mortgage, among other services. The only negative with this new addition check is if you have missed rental payments – you may not stand in a strong position. Overall it will help tenants get their feet on the property ladder and help them buy their first home.