For Generation Rent, giving pretty much half your monthly wages to your landlord is a sad fact of life – and it can sometimes feel like all you’re doing is paying off their mortgage.
If you do happen to own a home, keeping up with payments helps you build your credit score. But while renting doesn’t automatically impact your file, there’s a little-known route for tenants to get the same benefit.
As rent reporting communicates each payment to credit agencies, it means you’re getting more mileage out of your money in the process. Better still, it’s quick and easy to set up.
Services like CreditLadder and Canopy give tenants the option to register, with each payment reported directly to agencies including Experian, Equifax, TransUnion, and Crediva.
All you need to do is give consent to link your bank account, pay your rent as you normally would, et voilà – your credit score will thank you for it (after six to eight weeks, that is).
‘It feels unusual that rent, a regular payment of high value, doesn’t count towards building your credit score,’ Jo Allsop, director of lenders and finance expert at Zuto, tells Metro. ‘However, there are ways to make it work harder.’
According to Jo, rent reporting is ‘particularly beneficial if you’re not using traditional forms of credit’ – like credit cards or, indeed, a mortgage repayment plan.
And although you don’t need your landlord or letting agent’s permission to sign up, they may already be reporting your payments through a separate scheme, so it’s worth checking – or even having an open conversation with them – to see if they would consider taking part.
What’s a good credit score?
Checking your credit score can be nerve-wracking, and data from Zuto finds that 55% of Brits are worried about doing it.
First thing’s first, you’re probably wondering what counts as a ‘good’ credit score. But here’s where it gets confusing, because different credit agencies use different bands.
As Jo explains, the ‘general rule of thumb’ is ‘the higher, the better.’
While Equifax ranks a good credit score between 531 and 810, Experian considers it to be between 881 and 960, and TransUnion 604 to 627.
The benefits of rent reporting
Rent reporting doesn’t just help your credit score – it can also help with mortgage applications, should you find yourself in a position to buy in the future.
‘Lenders use credit scores to assess financial responsibility, and a history of timely rent payments can strengthen your mortgage application by proving your commitment to meeting monthly housing payments,’ the Hamptons website explains.
‘This is particularly valuable for first-time buyers who may lack other substantial credit history.’
Which banks are included in the CreditLadder rent reporting scheme?
- Bank of Scotland
- Barclays
- Chelsea Building Society
- Chase
- Danske Bank
- First Direct
- Halifax
- HSBC
- Lloyds Bank
- MBNA
- Monzo
- Nationwide
- NatWest
- Revolut
- Royal Bank of Scotland
- Santander
- Starling Bank
- Tesco Bank
- Tide
- TSB
- Ulster Bank
- Virgin Money
- Wise
- Yorkshire Building Society.
Plus, it helps to give a more detailed picture of your finances – incorporating your relationship with housing specifically into your report.
‘Your credit profile should ideally reflect all aspects of your financial behaviour,’ Hamptons adds, noting that lenders tend to prefer a ‘well-rounded’ view of your financial habits.
However, it’s worth noting that even when rent payments are reported, not all agencies use this information directly as part of their scoring models.
While the rental history might physically appear on the report, it might not always be as important as other traditional contributors, like paying off a loan or a credit card on time.
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