The Chancellors’ recent efforts to make mortgage lenders take account of rent payment history when assessing first time buyers is in jeopardy after a leading bank revealed both ignorance and concern about credit scores among the young.

HSBC quizzed 2,000 people about credit scores and found that a fifth had no idea what a ‘good score’ was while another third had not ever checked their score. Also, nearly half had not made any effort to improve their score.

Rachel Reeves revealed that HMRC wants lenders to take rental payment history when assessing loan applicants, an initiative announced within her ‘Leeds reforms’ in July, part of a raft of significant changes designed to relax mortgage lending rules and get the housing market motoring again.

At the time, Nicholas Mendes of broker John Charcol said: “The recognition that a person’s history of paying rent should be considered when assessing their ability to repay a mortgage is something many in the industry have been calling for over many years”.

But HSBC’s research reveals that awareness of a credit score’s importance during the mortgage application process remains low, and many people’s reluctance to get involved.

“This research highlights a crucial disconnect between financial concern and practical understanding, especially among younger generations,” says Carl Watchorn, Head of Customer Propositions at HSBC UK.

Education

Sheraz Dar, CEO of CreditLadder, which helps tenants improve their scores, says: “The findings from HSBC confirm the feedback we’ve received from our customers over a number of years.

“To help address this, financial education should be a key component of what’s taught in schools to help children prepare for adulthood as well as something that should be afforded to adults to help them better navigate this area.

“Furthermore, with 40% of the population renting it’s also important these tenants add their rent payments to their credit files to help improve their credit position.”