Pay rent on time and build your credit score


(Asa Bentley) #1

Are you a tenant? Do you pay your rent on time? If so, read on…

A tenants largest expense is most likely to be rent. What surprises most tenants is that currently, this DOES NOT count toward their credit score. Additionally, if you are a Monzo user you will notice that there is no current default categorisation for rent. I imagine this will be available with the new current accounts and their ability to set up regular payments.

What I would like to see is the ability for me to add my rental payments and opt into having them reported to Experian via an integration through CreditLadder. The CreditLadder reporting service is free. This, in turn, would help to build my credit score through my Monzo account and as a result, provide me better deals and savings when seeking credit agreements for mobile phone contracts, white goods, a car and even one day, my first home.

Background

Rewind a couple of years and The Big Issue Invest (their investment arm) partnered with Experian to create The Rental Exchange following the success of the established Rental Burea in the US. The idea is for social and private tenants in the UK to have rent reported helping with identity checks and allowing for access to better credit. Whilst they have been successful in helping 2m social tenants it is now the turn of private tenants. CreditLadder is recommended by Experian for tenants to report their rent and make it count towards their credit file. See: http://www.experian.co.uk/rental-exchange/tenants.html

Disclaimer: I am a Director at CreditLadder

We could readily integrate with Monzo assuming the appetite is there for users. Tenants can pay their landlord/agent direct and we see this as simple as a radio button/accept terms opt-in.

Please do let me know what you think. I’d love to hear the thoughts from such an exciting community.


(Allie) #2

… if you have nothing nice to say, don’t say anything at all. That about sums up my thoughts.


(Justin I'Onn) #3

I’d be REALLY interested in this kind of scheme.


(Andre Borie) #4

My middle finger is always high for credit bureaus and similar entities that hold my data hostage waiting for a data breach (like Equifax had in the US recently), so no thanks.


(Asa Bentley) #5

Fully respect your views on Equifax. Experian have however not had any data breach. What alternatives do you use as a means to applying for credit? I’m interested to hear your thoughts.


(Allie) #6

Asakb, to me rent and utilities have naturally, as essentials, been exempt from the whole world of credit reporting. That’s why I don’t have much nice to say. Yes, I know British Gas now reports, but in general it feels like something that should be protected from reporting.


(Andrew) #7

As someone who has been using Credit ladder for about 6 months and love the service, I think this would be a great idea. It’s such a simple service to use and once set up I don’t even think about it


(Asa Bentley) #8

Thank you so much for the insight. Utilities are from my experience, in general, reported to credit agencies. For rent, if we one day wish to own our homes then why should we waste our biggest expense? If the CreditWorthiness bill does turn into law lenders will have to take rent and council tax payments into consideration before making a lending decision. The benefit that CreditLadder provides is that you get to build your score along the way as well as having a verified record of payments. I fully respect that in light of this if you still feel uncomfortable sharing this data then that is your decision.


(Alan Davies) #9

Think this is a brilliant idea. I been paying rent for the last 14 years so having a record of the all these transactions and on time too would be a good way of being credit worthy.


(Andre Borie) #10

Not yet you mean, and without even considering data breaches I still don’t like credit bureaus since they profit off your data but also make you pay to access your own data (see Experian CreditExpert or similar).

What solutions do I prepose? Well in France for example they have no such thing as a “credit history” (an entity silently keeping track of everyone’s credit-related activities would run afoul of all their privacy laws). There is a government-maintained file of bad payers (onto which you get on for 10 years - after going through court if the lenders couldn’t reach a mutual agreement with you to pay them back) and otherwise everyone is presumed innocent and able to apply to credit. When applying for credit they ask for some more info than they do in the UK, like actual proof of employment - usually work contract or payslip, etc - and then make their decision based on this. Lenders haven’t gone bankrupt in France so this system must be viable.


(Asa Bentley) #11

Interesting to hear. I never knew this and maybe one day we will see this come to the UK… For now, it seems, to be able to obtain credit for big-ticket purchases in the UK you will have to satisfy the requirements of the credit reference agencies. The more positive a record you can build, the more money you save when obtaining finance deals.


(Jamie 🏳️‍🌈) #12

Your gas company will report you pretty swiftly if you miss a bill. Telecoms (mobile and land) will report monthly if the status is paid up or in arrears.


(Andre Borie) #13

Yes I totally understand your point of view, I just wish you worked on a way to do credit history better rather than contributing to the pockets of the credit bureaus.


(Allie) #14

I’m not convinced that system is better - it involves giving far more private information to lenders. Information that could be used to discriminate. At least the CRBs, awful as they are, add an extra privacy layer to lending decisions?

Telecoms reports, but I am pretty sure British Gas is the only energy supplier that does (maybe some of the other big 6, too?).

The basic reason I’m opposed to rent and energy reporting is because of the risk someone in poverty would find themselves in a dangerous situation to avoid damaging their credit report. Frozen, starving, etc.


(Asa Bentley) #15

This 2015 article mentions that millions of files now include utilities so I would imagine since then this accounts for more files. http://www.experian.co.uk/blogs/consumer-advice/household-bills-better-credit/. What is important to point out is that The Rental Exchange was established to help those in social housing with 1.5m records now reporting. This is being brought to the private rented sector next due to the benefits I’ve mentioned previously.

From the November 24th second reading of the Creditworthiness Assessment Bill in the House of Lords, I would like to quote the founder of The Big Issue and Crossbencher John Bird,

If you look at the work that I have been doing over the last 26 years, it has nearly always been aimed at how we can dismantle poverty in the lives of the neediest. One escape route is obviously around education and housing and the opportunities that you get through work—but another thing, which is hidden, is how expensive it is to be poor. It is incredibly expensive. If you are poor, you pay more for your electricity, gas and credit.


(Andre Borie) #16

But in this case you are giving out more info to one lender. In the current case however anyone can query and leak the credit bureau’s database, not to mention you’re often not in control of what you put in there in the first place.


(Allie) #17

Not at all untrue, but think of the info things like bank statements contain that a credit report doesn’t. Worst case, even records on private medical treatment. Imagine if I went to a private GIC, instead of the NHS (waiting lists and all, people do it) - that would be on my bank statement. Never on my credit report.