In an attempt to treat renters and homeowners equally, Experian has developed a scheme called ‘The Rental Exchange’. The initiative aims to tackle the financial exclusion challenges that rental tenants often face compared to homeowners such as building a good credit score.
The way the scheme works is that Experian observes rental payment data in the same way that they view mortgage data, which yields a number of benefits for tenants, housing providers and property managers.
By paying their rent on time, tenants can build up a validated rental record enabling them to build a good credit report. The scheme, therefore, allows tenants to strengthen their credit report without needing to take on new credit, including tenants that do not already have a credit history.
Taking part in the initiative will give tenants increased access to mainstream credit as they are able to share their credit history with future landlords and financial institutions, such as mortgage providers and other lenders.
How it works
Property managers share details about the rent paid by the tenants with Experian on a monthly basis. This is then included in their credit report, meaning any rent paid on time will be recognised.
Arthur’s integration with Experian makes the process effortless for property managers by automatically reconciling the rental payments of tenants which are then reported to Experian.
The initiative encourages tenants to pay their rent on time by offering them the facility to build their credit file. This will help reduce rent arrears for property managers meaning that it is a win-win situation for both parties.
In addition, any missed payments will result in a negative impact on the tenants credit score. This is hugely important for any tenant and therefore they are much more incentivised to make the correct payments in a timely fashion.
In regards to social housing, ‘The Rental Exchange’ helps Local Authorities, Housing Associations and ALMOs to support the financial inclusion of tenants and help renters to access affordable credit and services. The tenants’ proven track history allows social housing providers and managers to build steady, long-term social housing leases.