Credit-scoring firm Experian has recently launched a new scheme for private rental sector tenants. The company has partnered with Make Ur Move (aka Credit Ladder), an online letting agent, to allow renters to use their rental records to strengthen their credit histories.
Tenants will now be able to opt in to the free scheme, which operates similarly to credit history improvements enjoyed by homeowners paying mortgages. Once they have signed up, any rental payment data submitted will begin to build their credit history. This data will then appear on Experian credit reports later in the year via their Rental Exchange database.
A spokesperson from Credit Ladder states: “There are millions of private renters who pay their rent on time each month but don’t get the recognition they deserve on their credit report.”
However, Tenant Referencing UK has spoken out against the new scheme.
The firm says: “In essence, what Experian are trying to say here is that by not having your rent registered alongside your credit reports, it will now be detrimental to your credit score. And by them having all your rent payments data that this will magically give you a better credit score.
“In point of fact, that is not the case. A renter who has rented their home and paid all their bills on time will have a good credit score whether they rent or own their home.”
Tenant Referencing UK believes that Experian is attempting to gather rental data and assess rent payments on tenants that pay their rent consistently, in order to sell the data on to third parties.
It warns landlords that while a tenant may have a good credit score, they are not necessarily a good tenant. Equally, someone with a bad credit score is not automatically a bad tenant.
The firm highlights that three years ago, Experian launched a similar scheme for social housing tenants. Experian claimed that based on their track record of regular rent payments, social housing tenants may be given the opportunity to rent in the private rental sector.
“The truism of this was an obvious data gathering exercise to sell the data of consistent rent payments to third parties to be able to offer loans,” insists Tenant Referencing UK.
In order to keep complications out of the private rental sector, Tenant Referencing UK offers its Tenant History Reports service, which provides landlords and letting agents an account of how a tenant has dealt and lived within rental properties in real time.
And while you may be protecting your property investment with thorough tenant referencing, it is vital that you ensure peace of mind with Rent Guarantee Insurance, which will ensure you still get paid even if your tenant defaults on the rent.