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NALS backs system allowing rent to contribute to credit scores

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.

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    But it's not credit? Rent is paid in advance?

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    Rent is due in full on the day it's due. So if it's £500pcm and it's due on the 01st of the month, you HAVE NOT 'paid in advance', you have paid on time. You are being given credit in the same way as if you were given a loan because if you do not meet the repayments (rent), then you cannot be evicted immediately (because of the law), thus are in receipt of credit. Being in the property is credit.

     
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    No credit agreements are signed upon taking out an AST - any agreed credit must have a Consumer Credit Agreement, and the provider must be FCA accreditated.

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    Your view of credit is very legally literal. If you are in a position to have someone essentially subsidising you/your residency in a property then you have credit. Perhaps not by your narrow definition involving FCA/CCA, but credit all the same.

     
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    A credit file is built on the legal definition of credit not any other.
    As it involves consumers it also has a regulatory responsibility.

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    And a creditor can use whatever information they like when deciding to accept new business. If NALS make this happen, regardless of your thinking, it *will* be utilised by credit providers. You're a one-man crusade Ajay. One who created his own Wikipedia entry. Like anyone gives a toss that, "In 1988 he joined Thomson Directories and worked his way up from sales to become a senior manager reporting directly to the board." Or that your were, "...responsible for 400 staff," when you worked at the Accident Group.

    Guess what, I also created "...an insurance backed deposit-free renting solution which slashes the costs of tenants renting homes." -It's called a homeowner guarantor! And FYI, you weren't, ..."the first letting agents in the UK to abolish deposits..." I haven't taken a single deposit since 2007 (I have over 150+ properties of my own and manage 350+ more).

    Best edit that Wiki entry...

     
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