To date, in the U.K. mortgage payments have counted toward building credit scores while monthly rental payments have not. As a result, those who live in social housing are at a disadvantage when trying to build financial credibility. Even if social housing renters do manage their money well and pay their rent on time, the system currently does not take into account these rental payments to help them build their credit scores.
Because of this, they may be excluded from more affordable credit lines, leading to an unfair cycle where they are not given the same opportunities to build positive credit and demonstrate financial credibility as those who make mortgage payments.
To address this inequality, I became a product manager for The Rental Exchange two years ago. The Rental Exchange is a joint initiative Experian started with Big Issue Invest – an organization that invests in social enterprises and charities preventing poverty in the U.K. This program works with registered social housing providers to incorporate tenants’ rent payment histories into their credit file, with no cost to either the housing provider or the tenant. I cannot tell you how rewarding it is to give people with limited credit history the chance to build-up their credit score and gain access to more affordable lines of credit.
My role in The Rental Exchange begins and ends with data. Step one is giving renters the opportunity to sign up and share their rental payment data with Experian, which they can do after consulting with their landlords. After we examine the data, we share insights with credit lenders, including banks, Telco and utility providers, helping them improve their credit decisions by basing their choices on more information than they had before.
Without this data, a lender wouldn’t be able to see that a tenant is responsible in paying their rent on time, so they may be more inclined to charge that consumer a higher interest rate or even turn them down for credit as deemed too high a risk. But with our help, the lender can clearly see that a tenant has consistently paid their rent on time, so they can extend more favorable conditions.
Every day is a milestone for The Rental Exchange. More and more individuals and social housing providers are seeking us out to share rental payment data, helping drive the program forward to reach new communities.
Data is all about creating a story. Personally, I’d love to hear and share more stories about how The Rental Exchange has helped an individual or family get access to the best credit deal possible, because it’s time that all tenants were given the same access to financial services as home owners.
Patrick Gray: Product Manager, Consumer Information Services, UK&I