Private tenants in the UK can keep up with rental payments for years yet never see any improvement on their credit scores, but more options are opening up to remedy the situation – and landlords can take advantage too.
Since the government launched a unique proptech competition earlier this year giving six finalists the cash to develop their ideas for technology to allow “rent recognition” in the sector, a number of firms have entered the space to help tenants improve their creditworthiness.
The scheme, which will see three or four winners chosen to receive a share of a £1.4m investment to further boost their offerings, has led to an increase in activity within the market, led by the finalists which are Bud, Canopy, CreditLadder, FirstHomeCoach, Movem and RentalStep.
An opportunity for landlords
One of the firms, CreditLadder, says it has more than 1,000 letting agents with tenants that already use its services, registering their rental payments through the platform in order to improve their credit scores. One of the major aims of this is to give tenants an added incentive to pay their rent on time, improving the sector for both the tenant and the landlord, while also offering opportunities for landlords and letting agents to attract more tenants by offering an additional, attractive service.
Sheraz Dar, CEO at CreditLadder, said: “We’ve always believed good behaviour should be rewarded and that tenants should see an improved credit score if they pay their rent on time.
“Having reported over £20m in rental payments so far, agents can trust our ability to manage what can be a complicated process without there being any burden on them. It’s a win-win for all involved.”
The fact that homeowners’ mortgage payments improve their credit scores, but tenants’ rental payments do not, has long since been a bugbear in the private rented sector (PRS), particularly as more and more people are renting for longer in the UK.
Providing added insight
Credit reporting agency Experian is also set to launch its new Rental Exchange Scheme to the PRS, initially created for social housing, which will allow rent payments to appear on UK credit reports.
Mark Goodfellow, Rental Exchange partner at Experian, said: “Homeowners with a mortgage have an advantage as their mortgage payment history can count towards their credit history and we believe rent payment history should be used in the same way.
“The data can be used by lenders to provide further insight into a tenant’s creditworthiness and affordability.”
