Credit agency Experian will now include rental payment information in its reports for the first time.
This change will affect more than 1.2m tenants across the UK. This follows a petition last year – with almost 150,000 signatures – that asked for this information to be used as proof that that applicants could afford a mortgage.
Recent research from rival credit agency, Equifax, indicated that the majority renters would like to see this information used when lenders make credit decisions.
Initially Experian is collecting data from more than than 150 social housing providers, local authorities and letting agencies, who are reporting data into its rental exchange.
The credit agency is also working with the number of technology companies that operate within the private rented sector to help tenants self-report their data.
Recent research suggests that almost eight out of 10 tenants (79 per cent) would have seen a improvement in their credit score if lenders took this rental data into account.
In addition, analysis shows that by adding rental data to credit report, the proportion of tenants who can prove their identity online increases from 39 per cent to 84 per cent, broadening the range of financial services available to them.
Experian consumer services managing director Clive Lawson says: “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.
“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.”
He adds that many lenders have outlined their interest in adding rental payment data to their credit decision-making process, while a number are already testing the data in their systems.