No way.. renting could help my credit score? Yes way.

By Natasha Culzac

In a severe case of ‘About Bl***y Time’, your monthly rent payments can finally contribute to your credit rating.

Yay! Wait, they didn’t before?

No, annoyingly. Rent is generally up there as a bill priority, but your on-time payments were never factored in. Credit scores traditionally only looked at debt and credit products, however this is slowly changing.

So, how does it work?

Experian, one of the biggest credit reference agencies in the UK, has partnered with an organisation called Credit Ladder to help tenants, both private and social, get a much-needed boost to their scores and get the same advantages as mortgage-payers. But you have to opt in to it.

Basically, Credit Ladder works as a middleman between you and your landlord or estate agent. You pay Credit Ladder and they pay it on. Your landlord still receives the rent on the same date, it’s just that it’s gone through this third party, which having confirmed that you paid your rent on time, tells Experian so. Each month that you pay on time, Experian will note it on your credit report. You will benefit from increased fraud prevention and you can also do it in a shared house.

Are there any downsides?

Only if you think you might fail to pay your rent adequately. Also, Credit Ladder is unable to process previous rent payments – it only works for rent going forward.

The scheme can only accept payments as bank transfers (not cash, cheque or with credit or debit cards) and it only supports monthly payments, not weekly or fortnightly.

When will I see a change to my score?

Unfortunately you’ll need to be patient with this one. This is the long game. Your score won’t actually increase any time soon because Experian is still in the process of working out how many points your rent is worth. As it’s so new, it’ll take a while for them to analyse the data. However, your payments will still be shown on your record for lenders to see, and once you’ve built up a good number of months using the system, you’ll be in a great position to benefit once scores take the data into account.

Why was the scheme started?

Thankfully, credit reference agencies like Experian are constantly trying to diversify the way they analyse you and your finances. A few years ago it started adding household bill payments, like gas and electricity, to credit records and now it’s moved onto rent.

For homeowners, mortgage payments automatically contribute to credit scores, but for poor old Generation Rent, we just kinda had to lump it.

Doesn’t seem very fair

It isn’t. That’s why CreditLadder and Experian are pushing for a level playing field. It will really benefit students, millennials and those with a thin credit history.

Be aware that only Experian has taken the plunge so far, so your rental payments won’t be shown on the records that other credit reference agencies, like Equifax or CallCredit, have for you.

Top Takeaway

Whether you’re still in shared uni accommodation or renting that first flat in the big city, it could well be worth your while to opt in to Credit Ladder. Make sure you’re confident of making those monthly payments on time because if you do it could be the difference between an average credit score and an excellent one. As mentioned, it’s a long game for when this data becomes used by credit reference agencies, but it’s a good idea to register so you can benefit when it does come into effect.



By Natasha Culzac

Thanks to a journalistic career history and a childhood at Sylvia Young Theatre School, Natasha has her fingers in a few professional pies, doing her best impression of a model and actor as well as personal finance writer. Outside of work she compulsively watches BBC period dramas and constantly lies to herself that this year will be the year she learns French, once and for all.

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