Fewer young people are buying homes. That means, while some will keep living with parents, many others will be paying rent to have a roof over their heads.
There are a lot of common negative conceptions about renting, particularly that all you’re doing is paying someone else’s mortgage.
While this is potentially the case, there are positives such as flexibility and the fact that if the boiler breaks the cost doesn’t lie on your shoulders.
However, it doesn’t always ease the pain of knowing that the ‘investment’ you make in paying your rent has little pay-off in the long term.
That’s why a new scheme that helps you build your credit score by paying your rent on time can do something bigger than just lining your landlord’s pockets.
How to build your credit score by paying rent
The way you do this is through a scheme called The Rental Exchange.
It’s open to social and private tenants, and is totally free for landlords or tenants to sign up.
You can also still sign up even if you’re a joint tenant on a lease with other people.
The Rental Exchange acts as a database service, holding the information about your rental payments. They pass this on to Experian, who use the information to update your credit score.
One of the only real downsides is that if you fail to pay your rent, your credit score could go down. It also is only Experian currently signed up at the moment, so you may notice your Equifax and CallCredit scores stay the same.
How to sign up to The Rental Exchange
The easiest way to sign up for the scheme is to ask your landlord or social housing provider (of which over 150 are already signed up) to report your payments to The Rental Exchange.
If you can’t get your landlord or housing provider to sort it, however, you can sign individually.
Through Credit Ladder or Canopy – who are Experian’s official partners, you can input your details and they’ll connect to your bank to see if you’ve made the right payments.
If you have, you should see your credit score eventually begin to creep up when you make payments on time.
This can help you eventually get on the property ladder if you need a mortgage, or be accepted for better rates on loans and credit cards.
Clive Lawson, managing director of Experian Consumer Services, said: ‘We’re proud Experian is the first credit reference agency to add rental payment data to credit reports, leading the way in helping people understand their financial health.
‘Tenants pay a significant amount of money each month for the roofs over their heads, so it’s right to recognise these regular payments in a similar way as mortgages.’
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source https://metro.co.uk/2019/11/28/can-build-credit-score-paying-rent-11233863/
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