New Experian tool to help tenants build credit history

Credit Builder software has linked tenants’ rent payments to their Experian Credit report, providing a full and concise report for lettings agents, landlords and lenders. So will this new technology help non-homeowners get unsecured loans or even see them buy a property of their own.

The Credit builder is a digital platform to which tenants must consent and then their details are imported into the platform and each rental payment is then logged on the Experian Rental Exchange.

With both house prices and rent continuing to rise, first time buyers are faced with numerous obstacles when trying to get onto the property ladder or apply for unsecured credit. The issue was infamously raised and debated in Parliament, when Jamie Pogson a Plymouth dad campaigned for rent payments to be used as proof that tenants can afford a mortgage of their own, with 140,000 signatures agreeing with him.

Although the Government didn’t legislate in the end, it announced in the Autumn budget that is was prepared to commit £2million to find a digital tool to help first time buyers use rent payments as evidence of mortgage affordability. It was launched in December 2017.

Henry Yates CEO of Credit Builder said: “The groundswell of opinion that tenants’ rental payments should count toward their credit report is beginning to drive real change in the industry. Many tenants are understandably keen for this to happen as they view it as a good opportunity to enhance their credit score and improve their chances of being approved for a mortgage.

“With this in mind agents should consider offering a rent reporting service as this is likely to become an important consideration for new and existing tenants, as well as landlords,” he added.

Nottingham-based estate agent, Walton and Allen, has already signed-up to Credit Builder and has no rental arrears among those tenants using the service compared to an average of 7% for all tenants.  Director of Walton and Allen Mark Batty said: “Credit Builder provides much needed support for tenants that want to bridge the gap between renting and owning their own home. Credit Builder helps renters to enhance their credit score and to demonstrate to lenders their eligibility for a mortgage. The benefit to landlords is proven by the fact that all of our tenants using the Credit Builder platform have paid their rent on time and we no longer spend time chasing late payers.”

Indeed let’s hope that the platform is extended further to helps those tenants that apply for unsecured products such as loans and credit cards. Guarantor loans are used extensively to help tenants obtain an unsecured loan as the lender attempts to minimise their risk by using a guarantor. If rent payments were used as proof of a tenants’ ability to pay then this could help millions of consumers access unsecured lending products.