The launch of “Rental Exchange” announced on the 15th March 2012 by Experian®, the UK’s leading credit reference agency, is a very interesting and welcome development for both Landlords and Tenants.
While information about mortgage payments is included on credit reports, rent payment information currently isn’t. This means that a Tenant living in a privately rented property who meets their rent payments on time hasn’t seen this positive information registered on their credit report – but this is about to change.
The Rental Exchange will offer a secure and compliant way to include a tenant’s payment history in credit reports, with their permission, strengthening their credit history and helping them qualify for more and lower-cost credit deals.
Tenants that maintain a positive rent payment history will benefit from:
• Low-cost credit available for more people. The inclusion of rental-payment data will strengthen people’s credit histories, potentially giving them access to cheaper credit deals.
• A boost for first-time buyers. This could provide a welcome boost to the credit histories of people looking to get onto the property ladder for the first time, as lenders will be able to more easily verify their full borrowing history.
• Easier identity verification. Many financial organisations rely on electronic identity checks based on people’s credit reports. Stronger credit reports will help more people successfully satisfy these checks, avoiding the need to resort to slower, paper-based methods.
For Landlords there are two benefits that this system should bring; 1) Through the credit referencing check it will be possible to identify tenant applicants that have a positive rent payment history and 2) the system should give tenants a powerful incentive to make their rent payments in full and on time in order to build their own credit status.