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Can rent payments boost your credit score?

Can rent payments boost your credit score?

9th November 2018

Every adult – whatever their circumstances – has a personal credit score, and this information is used by lenders to assess their suitability for a mortgage, loan or other credit borrowing. Your credit score takes into account missed or late payments as well as – in the worst cases – County Court Judgments. Credit scores can be repaired, but it’s advisable to avoid any negative entries rather than be faced with having to rebuild your credit rating.

Simple ways of keeping a positive credit score are to avoid making too many credit applications in a short space of time, to ensure that you always pay your bills on time, to cut down your exiting debt before applying for additional credit and even to consider using a credit-builder credit card – even though these usually carry a higher interest rate than conventional credit cards, they are recognised as helping to improve your credit score.

Until now, however, a generation of renters have been unable to use their rental payments to build a positive credit rating, but thanks to government intervention this is about to change. A new startup service called Credit Ladder can link to your bank account to track your rent payments and pass this information to the leading credit rating agency, Experian. Historically, tenants have faced challenges with building their credit score, especially since their rent payment is likely to be their largest monthly commitment, but Credit Ladder is approved by HM Treasury and has already made a real difference to thousands of renters.

Another service entitled Bud uses artificial intelligence to help renters to identify their rental payments, but the service needs to be adopted by their bank initially. And a third option is RentalStep, which enables a landlord to buy a tenancy management service which tracks rental payments in order to boost a tenant’s ability to have their mortgage application accepted.

Andrew Ward, owner of Award Property Management, believes that such schemes are crucial to the future financial well-being of thousands of renters. ‘At Award we’re always conscious that we’re here to work with both landlords and tenants to build a mutually beneficial relationship,’ says Andrew. ‘It’s no secret that more and more people in the UK are finding it difficult to get on the property ladder so are tied into renting for longer periods. Until now, their rental payments – and their commitment to paying their rent on time and in full – have not been recognised so have not contributed to a positive credit score. We’re very pleased that now, with the government’s help, this is on course to change. As leading letting agents in Cambridge, we’re currently evaluating the best scheme for us to sign up to so that we can provide an even better service to our landlords and tenants, both today and into the future.’

Award Property Management are letting agents in Cambridge, so if you’re looking for help and advice with any aspect of the rental market why not give us a call on 01954 718660? We’d love to hear from you.

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