Tenants demand rental history is included in credit score

Eight out of 10 consumers want rental payment history to be considered in lending decisions.

This survey, by credit agency Equifax and YouGov, shows renters want more factors to be taken into account in a bid to improve credit scores.

Equifax’s own data indicates that inclusion of this information could improve the credit scores of around one in three tenants.

This comes as a separate question in the poll revealed that more half of those renting  do not expect to own their own home.

The most common reason cited for not being able to afford to buy, was the difficulty saving a deposit. This reason was given by 45 per cent of tenants.

A further 38 per cent said they did not believe they would be approved for a mortgage, while 32 per cent say they didn’t think they would be able to meet monthly mortgage payments.

However when asked 29 per cent of renters said they anticipated that monthly mortgage payments would be similar to current rental payments, while a quarter think they could access a mortgage with higher monthly payments.

Equifax points out that in reality, renters will not necessarily be approved for a mortgage with similar monthly repayments, as lenders have to account for additional expenses such as home insurance, and potential interest rate rises. Only 17 per cent of renters were aware of this.

Not surprisingly the survey found homeowners are much more confident they’ll be able to get credit than renters, 41 per cent  expect it to be very easy, compared to 11 per cent of renters.

Nearly a third (31 per cent) of renters have been turned down for credit, compared to just 14 per cent of home owners.

Following an unsuccessful credit application, 61 per cent of renters said they would have liked information about why they weren’t accepted.

Equifax’s European head of product Laura Hales says: “There are 14.8m renters in the UK and research indicates a third of millennials could be renting for life.

“Our research highlights the serious challenges renters face when it comes to seeking credit, whether they’re trying to get onto the housing ladder or take out a new mobile phone contract.

“Currently rental payment history isn’t necessarily reflected in people’s credit reports and in today’s society that must change.”

She adds: “This issue is exacerbated further in the social housing sector, where by allowing lenders access to rental and other payment data, such as council tax, tenants’ access to affordable credit can be greatly improved. Our own research confirms including this data would improve a third (33 per per cent) of all tenant’s credit score.”

Equifax adds that progress is  being made to enable this data to be collected and shared. It says it is working with providers  of rental data apps, lenders and policy makers to increase coverage.

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  • Charlie Baker 22nd October 2018 at 1:28 pm

    I think this will be a good thing for all involved provided the credit reference agencies don’t charge an arm and a leg for it. It will help renters show a payment histories to mortgage companies, and landlords a payment history for potential new renters. Its important that the data is accurately reflected by the letting agencies/landlords. I had a letting agent pay late twice despite the tenant having paid on time.