Landlords back rent payments being used to calculate credit scores
Rent payments should be included when calculating credit scores to support tenants wanting to get on the housing ladder and buy a home of their own, according to landlords.
Most landlords, some 61%, support the idea of change as currently credit rating agencies do not routinely include rent payment history when calculating credit scores.
According to the Residential Landlords Association (RLA) this means that a tenant can find it difficult to access a mortgage, even if they have a long history of rent being paid in full and on time.
It also says that including rent payment in this way would also support landlords, providing them with a more accurate assessment of a prospective tenant’s credit and rent payment history.
The RLA is writing to the Government calling on it to work with the industry to include rent payment history as a standard feature when calculating credit scores.
‘With many tenants wanting to buy a house of their own, it is absurd rent payment is not routinely included when undertaking credit checks for mortgage applications,’ said the RLA’s chairman Alan Ward.
‘Moving to such a scheme would help not just tenants, but also landlords by giving them a clearer sense of whether a prospective tenant has historically paid their rent in full and on time,’ he added.
The industry supports the idea. Sheraz Dar, chief executive officer of Credit Ladder, said his firm is already doing so. ‘We were set up to enable tenants to ensure their regular rent payments were added to their score,’ he said.
‘We’ve made it clear that if they fail to pay their rent this will be passed on too. We’ve already processed rents in excess of £7.5 million.