Tenants are being given the chance to build up their credit score by signing up to a new service that links their rental payments with the Experian referencing service.
The Credit Builder platform is designed to help tenants improve their credit history by building up a validated rental record which they can share with future landlords and financial institutions, such as mortgage lenders when trying to buy a property.
Agents and landlords can also offer the service themselves to tenants.
Tenants will be able to consent to the use of the rent reporting service as a condition of their tenancy agreement with a landlord or lettings agent.
Their details will then be imported into the Credit Builder platform and each subsequent rental payment they make will be automatically reconciled and reported to Experian.
The service is part of Experian’s Rental Service that has been set up to allow tenants and landlords to access services that record rental payment history. Provides include Credit Builder as well as Credit Ladder and Canopy.
If tenants pay their rent through these services it will be referenced on their credit score which could boost their chances of getting a mortgage.
One user, Mark Batty, director of Walton and Allen estate agents, said: “Credit Builder provides much needed support for tenants that want to bridge the gap between renting and owning their own home.
“Credit Builder helps renters to enhance their credit score and to demonstrate to lenders their eligibility for a mortgage. The benefit to landlords is proven by the fact that all of our tenants using the Credit Builder platform have paid their rent on time and we no longer spend time chasing late payers.
“Both our tenants and landlords love the fact that we offer the service and it has provided a real differentiator for us among our competitors.”
Henry Yates, founder of Credit Builder, said: “The groundswell of opinion that tenants’ rental payments should count towards their credit report is beginning to drive real change in the industry. Many renters are understandably keen for this to happen as they view it as good opportunity to enhance their credit score and improve their chances of being approved for a mortgage.
“With this in mind agents should consider offering a rent reporting service as this is likely to become an important consideration for new and existing tenants, as well as landlords.”
It comes after MPs held a Westminster debate last October on a public petition backed by almost 150,000 signatories calling for “paying rent on time to be recognised as evidence that mortgage repayments can be met.”
At the time the Government said it was up to the private sector to come up with solutions.
It is currently running a separate Rent Recognition Challenge competition to fund those who can come up with ways to record the data.