Tenants meeting their rental payments on time will get a credit score boost under Experian, potentially improving their credentials when applying for facilities such as car finance.
Renters can sign up – or ask their landlord or letting agent to opt in – to Experian-backed platforms CreditLadder and Canopy, which will track monthly transaction data from tenants’ bank accounts to augment their credit score report.
This will in turn make it easier for non-homeowners to prove their creditworthiness when applying for borrowing facilities such as credit cards, mortgages and car finance.
Clive Lawson, managing director of Experian Consumer Services, said: “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.”
A spokesman for Experian said: “Tenants could use our partners CreditLadder and Canopy previously to record their rental payments but now is the first time they have been able to see their payments included on their credit reports.
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“Experian had to collate enough data through working with housing associations and tenants to ensure the Exchange was viable.”
The scheme follows on from Government’s Rental Recognition Challenge launched last year, which saw fintechs showcase ideas to improve financial inclusion for non-homeowners. Canopy and CreditLadder were among the winners of the challenge.
Experian’s move also comes as Parliament discusses legislation that would enforce inclusion of rental payments in a borrowers’ credit profile.
The UK Government and the Financial Conduct Authority (FCA) have been showing increased attention over recent years around younger generations’ ability to access finance, as declining home ownership and hiking property prices result in a shift in the priority of big-ticket purchases.
“A lot of [millennials] will not have bought a house before they buy their first cars,” Richard Jones, managing director at Black Horse, told Motor Finance in January of this year. “A car is probably the first major, big-ticket purchase in their life.”