Hey All, I now use Monzo for everything, salary, rent, day to day payments, pots and i’ve recently signed up to Monzo Plus, and love the new credit score feature.
One day I got a notification that my credit score had improved, excited I checked the app, around this time I was also looking to move.
Having paid rent on-time, for 2 years, the increase in my credit file, to my surprise had nothing to do with my rent payment.s This confused, and concerned me…as product design I instantly got the gut feeling that people deserved better.
With a little research I found others doing it, but not great, and then I thought who would I want to do it, of course Monzo.
Rent payments should go towards improving your credit score, its just the right think to do, something Monzo could do amazingly!
It’s kind of pointless using that because lenders don’t use that data when making decisions and it doesn’t contribute anything to your credit score.
You’re just giving up your data to put cash in some guys pocket and run yourself the risk if for some reason you have an issue with rent it gets automatically reported when it wouldn’t have otherwise.
Highly recommend keeping data to yourself where possible.
I know Experian came out with a Rental Exchange program, so from a tech perspective it seems workable, with canopy and and credit ladder claiming that it does? if its doesn’t work surely there would be a public outcry?
Think we’ve gone past keeping our financial data to ourselves
Really! makes sense as your credit score is your ability to repay credit, so technically you could use credit ladder or canopy or some other product, pay rent through them, with the understanding its helping your credit only to find out its not taken in consideration!? What a Bummer…
It’s pretty crazy… you get lenders effectively saying ‘you can’t prove you could pay x per month’ when x is the the same or even lower than the rent you’ve been paying for multiple years.
I had to provide 5 years worth of printed bank statements to get over that one… and that was with a fairly lenient lender (locally based).
Someone else has mentioned CreditLadder and I can confirm it works with Monzo - my rent is reported to Experian.
There’s a few replies that rent is not credit so does not affect your credit score that are factually incorrect. Rental reporting is opt-in only, so the impact on credit scores is not likely to be high but some credit reference agencies are taking it into account to allow people to improve their score. The slightly worrying part is that to do it, you grant access to your transaction history - which, if CreditLadder are unscrupulous, could be used beyond the scope of just rent.
The issue here is the customer trying to finesse their credit score or report unnecessarily.
There’s no need to do this. Just pay your bills on time, take out a credit card and pay it off every month, and your access to credit when you need it will be fine.
Given that the credit reference agencies have specifically built tools, spoken to press companies about it and actively encourage it, I’m not sure how you’ve come to the conclusion that this is unnecessary or gaming the system.
Rent and mortgage payments are considered a prime outgoing - how you pay those versus your other credit commitments is extremely valuable data to a credit reference agency - especially when considering your application for a mortgage. Missing a mobile phone payment or two in the last 6 years is much less of a worry to mortgage lenders if they can see rental payments were made on time and in full for that period.
I’d add in my opinion, this feature is a pointless one for Monzo to build given you can achieve this via CreditLadder using OpenBanking.
There’s your reason why it’s not necessary. They’ve done all that stuff to profit themselves, not to help you get a mortgage. They just want your data.
The banks which actually lend mortgages don’t actually care if you’re in the <1% of the fintech-using population letting some start-up ‘report’ your rent. Lenders have their own criteria and are happily lending to many more people who don’t do that.
I’m sorry to break it to you, but using Credit Ladder is not going to be the thing which gets you over the line with a mortgage application.
Credit reference agencies spending money on data and then not using it to make money from lenders sounds slightly incredulous. Feel free to provide sources for that opinion but it sounds wrong to me.
Regarding your opinion on “<1%” - Experian state they had 1.2m users of this service in Oct 2018.Source: https://www.bbc.co.uk/news/business-45956793 (This same source quotes Experian themselves saying 79% of those users are benefitting from a better credit score because of it)
It may be benefitting your credit score - as in what you and only you see online when looking at your credit report.
The significant majority of companies searching your credit file do not request rent data and it would have literally zero impact on your application for credit.
I think that pretty much answers the original question! Thanks everyone for your contributions and insight! The initial intent was to drill down a little further to some fundamental truths, with the goal to help people get better access to financial products, not just a nice score to look at . And the buck seems to stop at the lenders door. But is that only because that’s the way its always been, if a lender was to accept it, how might that look? What terms would that be? What if a tenancy was set up as a credit “type” agreement, similar to broadband or a mobile phone contract?
I can’t find the link to the story about it but apparently lenders get the data with and without the rent payment part taken into account. Credit scores and data form part of a lenders decision making processes and they are closely guarded secrets so we will never know what extent they are used but it seems incredulous to me that credit agencies are harvesting this data and not selling it at a premium - if lenders are paying for the extra insight then they must be using it.
The initial intent was to drill down a little further to some fundamental truths, with the goal to help people get better access to financial products, not just a nice score to look at 
. And the buck seems to stop at the lenders door. But is that only because that’s the way its always been, if a lender was to accept it, how might that look? What terms would that be? What if a tenancy was set up as a credit “type” agreement, similar to broadband or a mobile phone contract?