The National Approved Letting Scheme is the latest organisation to back a system allowing tenants to strengthen their credit history, simply by paying their rent.
Last March we reported that Experian, a credit scoring and data firm, was launching a scheme that allows private sector tenants the opportunity to use their rent-paying records to strengthen their credit histories.
The initiative, called ‘Rental Exchange’ and operated with rent management company Credit Ladder, would help people to get similar credit history improvements to those enjoyed by homeowners paying off mortgages.
Now NALS says it is working with the Rental Exchange, asking its agents to get behind the scheme and offer it as an additional benefit to tenants.
The scheme, which is already widely used in the social housing sector, is quickly gaining traction in the private rented sector. Last September we reported on a Merseyside agency which was using the system.
NALS says agents can benefit from Rental Exchange because tenants have an increased incentive to pay their rent, and on time. Additionally, by paying rent on time, tenants will be able to demonstrate to a prospective agent that they are a good and reliable tenant. Tenants with a history of little or no credit can build a stronger credit history and gain access to mainstream, cheaper credit.
“In the past, building a good credit rating has been easier for homeowners than for tenants, because monthly mortgage payments are factored in. What many people don’t realise is that a good credit score helps you to access mainstream financial services from bank accounts, credit cards, personal loans and mortgages, to mobile phone and utilities contracts” explains Vicky McNab, head of Rental Exchange at Experian.