Lord John Bird, the founder of Big Issue, is tomorrow launching his own Bill in the House of Lords in a bid to have rental records included amongst the criteria used to assess people’s creditworthiness.
Bird - a cross-bench peer - says the rental payments of the UK’s 11m private and social renters are not recorded and so do not count towards, for example, an individual’s application to secure a mortgage.
It means many of the country’s least well-off tenants may be obliged - despite excellent rental payment records - to have repayment contracts on hire purchase schemes which are more expensive than those offered to owner occupiers.
“If you are a rent payer, even if you pay your rent on time for many years, it won’t necessarily get the credit file that you would if you were paying a mortgage. So we’re trying to help reliable rent-payers get the same advantages as reliable mortgage payers” says Lord Bird.
At present, credit rating agencies do not routinely include rent payment history when calculating credit scores. This means 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.
This follows the success of an online petition, 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.
Some lettings agencies have already participated in an experiment conducted by global information services company Experian; its Rental Exchange scheme helps private tenants strengthen their credit histories simply by Experian recording their rental payments.