Pay your rent on time - and boost your credit rating!
Do you always pay your rent on time? If so, your on-time payments could soon improve your credit rating in exactly the same way that homeowners benefit by keeping up their mortgage payments.
The Creditworthiness Assessment Bill, which is now going through Parliament, will enshrine this in law. The Bill requires certain matters to be taken into account when assessing a borrower?s creditworthiness and once enacted ? hopefully in 2019 ? for the first time, credit providers will have to include your rental and council tax payment history when calculating your credit score. At the moment, timely rental payments aren?t necessarily reflected in people?s credit reports but ? hopefully ? this is all about to change. The Bill, which was put forward by Big Issue founder Lord Bird, has cross-party backing in the House of Commons and had its second reading in October.
And the change won?t only work in tenants? favour ? it will be good news for landlords too. The Residential Landlords Association says 61% of landlords support the move; it believes including rent payments in your credit rating in this way will also make it easier for landlords to make a more accurate assessment of a prospective tenant?s credit and rent payment history. In turn that would make it more straightforward for people with a good credit record to find rental property quickly and easily.
This bill is long, long overdue. With rental and/or mortgage payments being the largest and arguably most important outgoing for UK households, it has always been unfair to tenants that they have been denied the ability to have their 'rent worthiness' to be taken into account.
Latest estimates show that around 5.4 million UK households rent, so once this legislation is enacted it stands to make a big difference to many people?s lives whether they wish to prove their credit worthiness to a prospective landlord, buy a new car or take out a bank loan. It will open up fairer access to more affordable credit to a wider pool of responsible borrowers and prevent people from falling into the high-cost-credit poverty trap.
Your Move?s Landlord Survey, which recently polled 1,071 landlords and tenants to learn more about their portfolios, behaviours and attitudes towards tenants, agents and the lettings market, shows that landlords vote trustworthiness as the most important quality in tenants. Just over a quarter (26%) of landlords? surveyed rate tenants who pay on time as the most important consideration.
PlanetRent created by the Ringley Group will soon be making rent worthiness data available to support tenants and landlords alike. PlanetRent is lettings automated - for landlords who want paperless deals, advertising, landlord websites, compliance sorted, protection from fines and the whole audit trail completely taken care of. To find out more go to PlanetRent.co.uk
Author : Mary-Anne Bowring
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