Discussion has been heating up about the topic of rent payments counting towards credit scores, and now CreditLadder, the UK rent reporting service, has partnered up with Bud, the financial network provider, to create a simple way for tenants to do so.
Both companies aim to help customers with building solid credit histories, which should hopefully aid them with getting a mortgage and buying their first property.
The way such a scheme works is that tenants can sign up and connect the bank account in which they pay rent out of, allowing for verification that they have been paying what they owe to their landlords. This information is then communicated with Experian, which updates your credit file accordingly.
With CreditLadder now in partnership with Bud, tenants will be able to access the service directly using their banking app.
This could be seen as great news for landlords, as no longer will paying rent go to the bottom of the list of prioritised bills, for those who are signed up. It could be considered that some rent arrears situations are an issue due to there being no penalty for failing to pay rent on time, whereas other outgoings, such as phone and utility bills, do.
Now, however, for any tenant planning on taking that step to homeowner, the prospect of having a bad credit rating could encourage prompt payments.
It is also worth bearing in mind that, as a landlord, you can get extra protection against rent arrears, by taking out Rent Guarantee Insurance. This cover, provided by Just Landlords, will protect you against your residential tenant defaulting or failing to pay the rent, taking away some of the stress associated with being a landlord.
Alan Walsh, Network & Partnerships at Bud, has commented: “About 80% of our team rent their homes, it’s their biggest monthly outgoing and they have long histories of making those payments on-time, month after month.
“It was just wrong that this data couldn’t be used to help them achieve what they wanted in life so it’s great to be working with the team at CreditLadder to address the situation.”
It looks like this could be great news for landlords. Would you considered encouraging your tenants to sign up?