According to a study, 98% of private tenants pay their rent on time. But at present, most credit rating agencies don’t take account of rental payments when calculating credit scores. Keeping up with monthly rent could benefit tenants looking to buy a place of their own and make them more attractive to lenders so there seems to be a disconnect to be addressed.

However, tenants who pay their monthly dues in full and on time wouldn’t be the only ones benefiting if rent payments were to be routinely included in credit ratings. Private landlords could also gain from such a move. It would help them make more accurate assessments of prospective tenants’ credit and payment history better placing them to make more informed decisions when choosing their tenants.


Landlords support

Based on a survey conducted by the Residential Landlords Association (RLA) on approximately 3,000 private landlords, 61% of them support the idea and would like to see rent payments included in credit ratings as standard.

The RLA’s chairman, Alan Ward, said: “With many tenants wanting to buy a house of their own, it is absurd rent payment is not routinely included when undertaking credit checks for mortgage applications.”

He continued: “Moving to such a scheme would help not just tenants, but also landlords by giving them a clearer sense of whether a prospective tenant has historically paid their rent in full and on time.”

The RLA is calling on the UK government to work together with the industry so that rental payment history is a standard feature of a credit rating.


The Rental Exchange scheme

Experian is currently the only credit rating agency that records rent payments under a free scheme called Rental Exchange available via the Credit Ladder platform. The scheme is still fairly new – it was launched in March 2016 to help private tenants boost their credit score simply by paying their rent on time. Tenants would pay their rent to a third party, Credit Ladder, who then would pass the payment to the landlord/letting agency and send information whether the rent has been paid on time to Experian. The credit rating agency would then update tenants’ credit files accordingly.

Sheraz Dar, CEO of Credit Ladder, said: “Credit Ladder was set up to enable tenants to ensure their regular rent payments were added to their credit score, and we make it clear that if they fail to pay their rent this will be passed on to Experian as well. We’ve already processed rents in excess of £7.5m.”

The scheme is still to take off but according to Experian 76% of private tenants would like their rent payment history to be included in their credit file.