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  • Introducing the
    Rental Exchange Initiative
  • The pros and cons of the
    Rental Exchange Initiative
  • Understanding the Rental Exchange
    Initiative in social housing
  • Use your voice
  • The Rental Exchange Initiative
    for letting agents and landlords

Introducing the Rental Exchange Initiative

The Rental Exchange Initiative is relatively new to these shores. Credit reference agency Experian has been working with Big Issue Invest to create a way for being a great tenant to count towards your credit score too. At the moment this has only been implemented for Social Housing tenants.

How does it work?

A tenant’s rental payments history becomes part of their credit report by the landlord handing over the rental payment record to Experian on a regular basis. There is no cost to do this and, as long as rental payments are made on time, it can considerably enhance a credit record. 

What is a credit report?

A credit report includes your personal credit history, including mortgages, credit cards, overdrafts, mobile phone contracts and even some utilities such as gas, electricity and water. If you’re over 18 and have ever taken out credit, a credit reference agency is likely to hold a credit report on you. You can find out more about your credit report on Experian’s website.

What is a credit score?

When you apply for credit, responsible lenders want to make sure you can comfortably afford to manage any new borrowing. To do so, they usually calculate a credit score, weighing up all the relevant information at their disposal. This helps them to assess the chances that you will be able to repay what you owe.

People with a high score are usually seen as lower risk, and are therefore more likely to be granted credit – and possibly at better rates.

Why is it necessary?

We all need access to credit, whether that’s to open a bank account or to set up an account with an energy provider but if you don’t have good credit – or any credit – then you’re stuck. Without a credit score it’s almost impossible to establish your identity with a potential lender or to prove any history with responsible borrowing. If you have a mortgage then your mortgage payments are taken as evidence of being a ‘good borrower’ and added to your credit score. However, there is no similar recognition for non-homeowners. With increasing numbers of us renting in the UK, it’s been essential to find a way for being a ‘good tenant’ to be reflected in something as important as a credit score. 

Who does it help?

Obviously the Rental Exchange Initiative helps tenants – there is now no need to take on new credit to give a credit score a boost, as this can come from the tenant’s rental performance instead. However, the initiative isn’t just designed to help tenants. Housing providers who sign up to the Rental Exchange willhaveaccess to more information on who is about to move in, where permission has been given by the tenant and will be able to offer longer term leases that provide more security for all, which are based on an official history of keeping up with rent payments. Credit providers will be able to widen out their services to a broader group of people and can make more accurate decisions about potential customers when evaluating them. It’s a win-win situation all round.  

We’d like to know what you think. Does this sound like something that you would like to get involved in? Do you think this is a positive measure that will open up the credit market to people who are currently excluded? Use the voting buttons to the right and give us an idea of whether you like the sound of the Rental Exchange Initiative and whether it might be able to help you.

Should your rent payments impact your credit rating like a mortgage repayment does for homeowners?

Yes No

The pros and cons of the Rental Exchange Initiative

Much of the talk around the Rental Exchange Initiative has surrounded the benefits for tenants and the clarity that this kind of insight is likely to provide for lenders. However, there are also benefits for landlords and agents too. If you’re a landlord or agent then it’s up to you to sign up for the scheme – and to make the regular reports to Experian about your tenant(s)’ rent payments – but there are some very obvious benefits to being involved. 

A better picture of tenants

Perhaps the biggest benefit is that the Rental Exchange Initiative gives you more information on your tenants. One of the biggest headaches for agents and landlords is when tenants don’t pay their rent and there’s no real way of knowing whether or not this has happened in the past with a potential tenant. Yes, you will have a reference from the previous landlord but it won’t go into any detail in terms of whether any rent payments were missed and when that happened. With the Rental Exchange Initiative that detail is there.

 Deterring missed rent payments

Another advantage for agents and landlords comes from the deterrent effect of the Rental Exchange Initiative. Sign your tenants up for this initiative and you will be handing over regular information about their rent payment behaviour to a third party. That information could have a significant influence over whether or not your tenant is able to apply for credit and few will want to damage their chances of an improved credit score by missing rent payments. You may find that those tenants who might have been careless about rent before suddenly make it a priority – and that’s good for everyone.

 Inspiring better tenants

The Rental Exchange Initiative is designed to give people who are excluded from certain of society’s benefits a way back in. It rewards ‘good behaviour’ in the same way that making regular payments on a mortgage does and it offers people who might have been disenfranchised a chance to put themselves back on the map. The positive effect that this kind of lifeline can have on people should not be underestimated. Credit can open up all sorts of opportunities that could well inspire a careless tenant who always paid rent late to suddenly become a model tenant who never misses a single month – that is worth its weight in gold to the lettings industry as a whole.

 If you’re an agent or a landlord and you’d like to tell us what you think of the Rental Exchange Initiative – and whether it will benefit you – we’d be interested to hear your voice. Just select the option of ‘landlord’ or ‘agent’ from the drop down menu on the right hand side of the page and then give us your feedback. 

 

 

Should your rent payments impact your credit rating like a mortgage repayment does for homeowners?

Yes No

Understanding the Rental Exchange Initiative in social housing

As a result of not being able to pass credit tests, one in five social tenants are unable to get loans from traditional mainstream lenders. This is the statistic that has partly inspired the Rental Exchange Initiative, which is designed to give social housing tenants the chance to access affordable loans. According to Jonathan Westley, managing Director of Experian’s UK&I Consumer Information Services, “Millions of social housing tenants have little or no credit history, so have been excluded from affordable credit, or paid a premium for it.” It’s this situation that the initiative is designed to change.

 Getting credit in 2015

It’s become increasingly difficult to get credit for many people and social housing tenants struggle more than most. This affects, not just the ability to apply for a loan or a credit card, but also to open a bank account, to get good deals on a mobile phone contract and even to shop online. You’ll also need credit for something as simple as accessing a non pre-pay energy tariff. Essentially, without a decent credit score many things can become more expensive – which seems counterintuitive if you’re already struggling.

 Making credit more accessible

Research by Experian found that six out of ten social tenants fail to pass the kind of automatic electronic identity checks that would open up access to some of the services mentioned above. With the addition of rental payments to a credit check, 84 per cent of those tenants could potentially pass. Experian estimates that rental payment data could potentially improve things for up to a million social tenants in the UK.

 

Building a rental history in the same way as mortgage holders

The Rental Exchange Initiative is being supported by Experian, by The Tenant’s Voice and also by Big Issue Invest, which is the social enterprise arm of the well-known magazine.. According to Sarah Forster, who was deputy chief executive of Big Issue Invest at the time the scheme was first announced, “For us, the Rental Exchange is about fairness, enabling social tenants to build a credit history in the same way as mortgage holders. Many tenants live in a very high cost economy. Having a positive credit history can help reduce the cost of living.”

 

Why is it necessary?

There are two needs that the Rental Exchange Initiative fulfils for social tenants. The first is giving people access to the better deals that are available to anyone with a credit score (especially a good credit score). The second need is to help people avoid turning to illegal finance, such as loan sharks. Borrowing is a part of our society and we all need to do it at times – around 20 per cent of social tenants fall just below mainstream lenders’ pass marks so some have no option other than to look outside normal channels. Responsible lending requires a broader view of someone’s lending commitments and repayment abilities – and the Rental Exchange Initiative can provide this wider perspective for social tenants.

Should your rent payments impact your credit rating like a mortgage repayment does for homeowners?

Yes No

Use your voice

Well, you’ve read about the Rental Exchange Initiative, now what do you think? You can use the voting buttons on the right to tell us what you think of the initiative, from your point of view. Below is a quick summary of what’s involved to refresh your memory. 

·         An initiative that allows tenants’ rental payment history to be included as part of their credit score. 

·         Landlords pass tenant rental history over to Experian on a regular basis. This costs tenants nothing. 

·         Get recognition in your credit report for paying your rent on time – just like a mortgage holder would. 

·         Build online proof of identity so as to be able to access essential services that wouldn’t be available if you couldn’t pass basic electronic identity checks.

Improve your credit record to offer access to better mainstream credit.

 We really want our community to be a part of growing this initiative – it’s something that could potentially make life a lot easier for many tenants in the UK. And given the rising cost of rents in this country, being able to get something back from that monthly commitment is a major bonus. The initiative is there to give lenders more information and to help landlords see your rental history but it’s also there to help tenants, which is why it’s so essential that as many of us as possible are involved. 

So, join our focus groups, tell us what you think, start a post on the forums or just use the voting buttons on the right to give us your feedback on whether you think the Rental Exchange Initiative is going to make the UK lettings industry a better place.

Should your rent payments impact your credit rating like a mortgage repayment does for homeowners?

Yes No

The Rental Exchange Initiative for letting agents and landlords

Much of the talk around the Rental Exchange Initiative has surrounded the benefits for tenants and the clarity that this kind of insight is likely to provide for lenders. However, there are also benefits for landlords and agents too. If you’re a landlord or agent then it’s up to you to sign up for the scheme – and to make the regular reports to Experian about your tenant(s)’ rent payments – but there are some very obvious benefits to being involved. 

A better picture of tenants

Perhaps the biggest benefit is that the Rental Exchange Initiative gives you more information on your tenants. One of the biggest headaches for agents and landlords is when tenants don’t pay their rent and there’s no real way of knowing whether or not this has happened in the past with a potential tenant. Yes, you will have a reference from the previous landlord but it won’t go into any detail in terms of whether any rent payments were missed and when that happened. With the Rental Exchange Initiative that detail is there.

 Deterring missed rent payments

Another advantage for agents and landlords comes from the deterrent effect of the Rental Exchange Initiative. Sign your tenants up for this initiative and you will be handing over regular information about their rent payment behaviour to a third party. That information could have a significant influence over whether or not your tenant is able to apply for credit and few will want to damage their chances of an improved credit score by missing rent payments. You may find that those tenants who might have been careless about rent before suddenly make it a priority – and that’s good for everyone.

 Inspiring better tenants

The Rental Exchange Initiative is designed to give people who are excluded from certain of society’s benefits a way back in. It rewards ‘good behaviour’ in the same way that making regular payments on a mortgage does and it offers people who might have been disenfranchised a chance to put themselves back on the map. The positive effect that this kind of lifeline can have on people should not be underestimated. Credit can open up all sorts of opportunities that could well inspire a careless tenant who always paid rent late to suddenly become a model tenant who never misses a single month – that is worth its weight in gold to the lettings industry as a whole.

 If you’re an agent or a landlord and you’d like to tell us what you think of the Rental Exchange Initiative – and whether it will benefit you – we’d be interested to hear your voice. Just select the option of ‘landlord’ or ‘agent’ from the drop down menu on the right hand side of the page and then give us your feedback. 

Should your rent payments impact your credit rating like a mortgage repayment does for homeowners?

Yes No