Experian launches rent payment database to help tenants build credit history
The Credit Builder software links tenants’ rental payments with their Experian credit report and provides a full rent reporting service for letting agents and landlords.
Tenants will need to consent to the use of the rent reporting service – their details will then be imported into the platform and each subsequent rental payment they make will be automatically reconciled and reported to the Experian Rental Exchange.
The question of using rental payments to prove mortgage affordability came into the national spotlight last year following a Parliament petition posted by Jamie Pogson from Plymouth raised more than 140,000 signatures.
With rising house prices and rents, first-time buyers have been finding it difficult to save large enough deposits without help from parents.
Government rejected Pogson’s calls to legislate, but announced at the Autumn Budget it was commencing a £2m fund to find a digital tool to help first-time buyer rental payments count toward affordability calculations for a mortgage application.
The competition was formally launched in December.
Credit Builder CEO and founder Henry Yates 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 renters 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.
One 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.
Mark Batty, director of estate agent Walton and Allen, 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.”
He added: “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.”