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Mandatory adding of rent payments to credit scores is now a step closer

The House of Lords has given the Creditworthiness Assessment Bill its second reading and a step forward to ensuring that tenants’ rental payment record counts towards their credit rating.

The Bill, moved by the founder of Big Issue, Lord John Bird, now moves to the committee stage of the Lords and appears to have growing all-party and government support, suggesting it is very likely to become law at some point in 2018.

Lord Bird, during the debate on Friday, put his case like this: “If you are a mortgage holder, and if you pay your mortgage on time and do not miss it too often, you will automatically have a higher credit rating, because the credit agencies will look at you and say that you are a jolly good chap, woman, student or whoever.

“But you might have been living in social housing, or in another form of rented accommodation, for one year, five years, or 10 years. There are the boxes to be ticked at the bottom of the form saying, ‘Are you a tenant?’ or ‘Are you a householder?’ and, if you are a householder, that box is ticked. 

“If you are a tenant, the paper is normally thrown away, not even considered, or you will be given a very low credit rating, because they do not take into account the fact that you are paying your rent. You could be an incredibly good tenant, paying regularly for many years—or you could be a lousy mortgage holder.”

Lord Bird’s Bill is not the only campaign moving in the direction of making this change. 

In last week’s Budget Chancellor Phillip Hammond announced a £2m competition to help create technology that will allow credit scoring firms to include rental payments.

This follows the success of an online petition to government, signed by 147,307 people, saying: "Paying rent on time [should] be recognised as evidence that mortgage repayments can be met".

The idea already has the backing of the Residential Landlords Association; it surveyed almost 3,000 landlords with 61 per cent of respondents supporting such a move. Including rent payment would also support landlords, the RLA says, providing them with a more accurate assessment of a prospective tenant’s credit and rent payment history.

And credit scoring company Experian has launched a scheme that allows private sector tenants the opportunity to use their rent-paying records to strengthen their credit histories. 

The initiative, operated with rent management company Credit Ladder, helps people to get similar credit history improvements to those enjoyed by homeowners paying off mortgages.

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  • Asa Bentley

    It was an excellent 2nd reading and well worth a watch. The passion of John Bird is infectious.

    Skip to 14:53 if you fancy a watch, http://www.parliamentlive.tv/Event/Index/e6193efe-e0b5-4cb8-b6ff-7607f6032199

    May I add that CreditLadder is also working with agents to encourage and assist them in introducing rent reporting to encourage lower arrears across their managed portfolio. Please do contact me via asa@creditladder.co.uk if you would like to discuss how this could benefit your agency at a time convenient for you.

  • Mike Georgeson

    I agree with Asa that the second reading was great and well done Lord John Bird for his continued enthusiasm in this! Anything that encourages tenants to prove they pay their rent on time and help improve their credit file is a great thing.

    My company, www.rentalstep.co, already allows tenants to add their rent payments to Experian's Rental Exchange scheme which improves their ability to access credit including mortgages.

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