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How to improve your credit history just by paying your rent
Buying a home of their own seems to be the dream of so many people. But everyone’s different, and you might not be ready to tie yourself down with a mortgage just yet.
However, it seems unfair to have your rent payments excluded from your credit history just because you don’t have a mortgage. After all, rent payments are still a sizeable regular outgoing. Well, Experian seems determined to change that, and you can now take action to get your rental payments included on your credit file.
Good news for renters
Whether you’re just not ready to lock yourself into a mortgage deal or you’re renting while you save up for a house deposit, this might come as good news to you.
Experian is beginning to update its system to include rental data when it calculates your score. This means that more and more lenders will be able to see how reliable you are in meeting your monthly rent payments. The credit reference agency is calling this the “Rental Exchange”.
Using the website Credit Ladder, you can now sign up to make your rent payments through it so they count towards your credit history. So, if you always pay your rent on time each month, you’ll start building yourself a positive credit history!
Your credit “score” might not change once you do start making payments though, as Experian uses a complex calculation that’s set to change over the coming months. But, this generally isn’t so important anyway, as each reference agency uses a different scoring scale, and lenders won’t be able to see what your score is. Instead, they will just see your rental payment history.
It’s worth bearing in mind that – just like any form of credit – missing payments or being late could work against you, and may make it harder to get credit in the future.
Get your social housing landlord on board
If you live in social housing, you may find that your landlord has already signed up to the service. If they have, they should let you know that Experian is recording your payments.
But, if you haven’t heard anything about this and you want your payments to be marked on your credit history, get in touch with them. You could give them a call or drop them an email and point them in this direction. They may be perfectly happy to sign up to the service, but for the time being, they are within their rights to say no.
It’s just Experian for now
At the moment, Experian is the only credit reference agency to offer this. We may see the other two agencies (Equifax and CallCredit) join in at some point, but there’s nothing set in stone just yet.
This means that your rental payments will only affect a lender’s decision if they view your credit history through Experian, rather than the other agencies.
Money Saving Expert has compiled a list of the credit reference agencies used by specific banks and lenders. It’s not a complete list, but it should give you a general idea of which agencies different lenders use. Generally, Experian is the most widely used by lenders, which is good news if you’re thinking of using CreditLadder.