Experian has revealed that nearly 80% of tenants who allow their rent to be recognised by a credit reference agency see an improvement in their credit score.
The claim is made by the company after revealing that it is to include the rental payments history of 1.2 million tenants renting in both the social and private housing sectors.
Experian has led the field in rent recognition over the past two years during which it has set up a system to capture the payments of tenants from 150 social housing providers and larger estate agents, while private renters have been able to self-report their payments via proptech initiatives such as CreditLadder and Canopy.
But while this data has been stored, it is only now that the benefit of the payments will begin to filter through into the Experian files lenders use to assess creditworthiness.
“Tenants pay a significant amount of money each month for the roofs over their heads, so it’s right to recognise these regular payments in a similar way as mortgages,” says Clive Lawson, Managing Director of Experian Consumer Services.
“Adding rental payment data to credit reports would help millions of people prove their identity so they can access online services and mainstream finance.
“We’re already working with a range of lenders who want to use rental data to improve their understanding of a person’s financial situation so they can make higher quality decisions.”
Sheraz Dar, who is CEO of one of the proptech firms named by Experian, says: “As the first and biggest rent reporting platform in the UK we’re delighted that tenants are now getting the benefit they deserve.”