Credit checking agency Experian is to add information about tenants and their rental payments into future credit checks.
It means that landlords and letting agents will be able to access information about rental applicants’ ability to pay rent previously, whilst lenders will also be able to see the information when assessing a tenant’s ability to move to paying a mortgage.
For tenants without rent arrears, the new Rental Exchange service should make it easier for them to be approved for a mortgage.
For tenants who miss rent payments, the reverse will be true and their credit score will fall.
Paul Vescovi, UK and Ireland managing director of Experian credit services, said: “With several million people living in privately rented accommodation, a significant percentage of the population could be missing out on mainstream, low-cost credit because lenders do not currently have a comprehensive picture of their financial track record.
“The Rental Exchange will strengthen people’s credit histories, helping them to access a wider range of credit deals.”
Experian estimates it will take 12 months for it to sign up a significant number of lettings agents and landlords to the service.
If there is a genuine dispute over a missed rent payment, Experian said the information would not appear on a tenant’s record until it was resolved.
The agency also said it will have safeguards in place to make sure tenants’ credit records were not affected by late payments of housing benefit – something which is outside the control of tenants on Local Housing Allowance.