RENTERS who want to boost their credit score can now report their payments to their landlords to three of the major credit reference agencies.
Property technology firm Credit Ladder previously helped tenants boost their ratings by creating a system which connects their bank accounts and rent payments to Experian.
Now the scheme has rolled out to Equifax and Call Credit too.
This means Equifax, Experian and Call Credit will now take into account your rent payments when working out your credit score.
Having a healthy credit score means you are more likely to get a new credit card, apply for a loan, or even a mortgage with better rates.
Your score is currently boosted by bills being paid on time and paying off credit cards before the deadline.
But – until Credit Ladder launched its scheme with Experian three years ago – your regular rent payments were not included.
Different lenders also use different agencies, so Credit Ladder’s scheme with Experian might not have counted towards your score.
How you can improve your credit score
WHILE there is no credit blacklist which bans people from any sort of borrowing at all- if you have struggled in the past you may find lenders won't consider you.
Here are tips to help you improve your rating:
- Don't make too many credit applications – Making lots of requests in a short period of time can be seen as a sign of financial distress – and each application will be recorded on your file. Use a "soft-search" eligibility calculator to show how likely you are to be accepted.
- Always pay your bills – Late payments are recorded in your file so make sure you pay your monthly bills on time including utility and credit cards.
- Pay down your debt – Try and cut down your existing debt before applying for new credit as lenders may be reluctant to lend to you if you already have a large amount of debt.
- Use a credit-builder credit card – These cards tend to have high interest rates compared to normal cards but if you can show you're a responsible spender with them, it can improve your chances in the eyes of lenders.
How it works is tenants sign up to the free service and give it permission to connect to your bank you pay your rent on.
This will give a third party called TrueLayer – which is regulated by the Financial Conduct Authority – access to look at your account – but it
won't be able to spend your cash.
Of course, it works both ways though, so if you know that making the rent on time is a struggle every month, then it will damage your score and leave you worse off.
The scheme is backed by HM Treasury and the Financial Conduct Authority.
Sheraz Dar, chief executive at CreditLadder.co.uk, said: “As one of the world’s leading credit reference agencies, working with Equifax to add tenants’ payment track records to their reports is a major enhancement for our users, and for our platform.”
The news comes as payday loan firm Peachy said it has gone into administration – with customers fearing their credit score could be damaged.
Online bank Monzo announced this week it will soon launch a system where its customers will be able to check their credit score on the app.
Last month, it was also revealed first time buyers can now also get a mortgage with just a five per cent deposit.
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