Yes, really! Okay, your rent isn’t credit in the traditional sense, but it can affect your credit score.
Start climbing the ladder
First things first – head over to Credit Ladder and sign up. It’s free! Yes, for your landlord and for you.
Let them know when you pay your rent, how much you pay and who it goes to, and you’ll get a unique reference.
You can use this reference to pay your rent. Don’t worry – your money will still be sent in full to your landlord or agency on time each month (so they won’t be round banging on your door late at night when you’re busy freaking out in front of an episode of American Horror Story).
There are certain things that affect your credit score, but rent hasn’t traditionally been one of them. Credit Ladder changes all that.
And it’s good news. After all, if you owned your home, paying your mortgage on time each month would have a positive effect on your credit history, which would go towards boosting your score. So, why shouldn’t you benefit from this just because you rent?
Why’s my credit score important?
When you apply to borrow anything from a credit card to a mortgage, lenders look at your credit history. This shows all the credit agreements you’ve had over the last six years or so and how well you’ve managed them.
Think of it a bit like online dating. You want to see at least a brief profile on the person who’s asked you out so you can work out if you’re going to have anything to talk about for three hours over your Nando’s. And if that profile shows dozens of pictures, each one with a new conquest, or, worse, just goes on about how much they love their mum, well – you’re probably not going to commit to a drink let alone PERi-PERi chicken.
With your credit history, if lenders can see you’ve made your payments in full and on time, this reassures them you’re a responsible borrower. If they see you’re often late with or miss payments - well, they might just turn you down.
And if you have very few credit agreements, they may decide they don’t have enough information to go on and so reject your application. This is where Credit Ladder comes in.
Build your own credit history
Payments made through Credit Ladder are included on your Experian credit report. If they’re always on time, lenders will see that you’re able to manage money responsibly.
So even if you haven’t borrowed before, you’re creating a credit history for future lenders to see. Just remember that if you sign up for this and then miss paying your rent (or pay it late) this will also be seen by lenders – so keep on top of things and don’t set yourself up for future rejection.
Find out more about Credit Ladder in our guide, here.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.