The Rental Exchange scheme is a new initiative which allows tenants to have their monthly rental payment recorded on their credit file.
This is a huge step forward for tenants, who until now, were not rewarded for consistently paying their rent on time. This is in contrast to homeowners, whose monthly mortgage payment is recorded on their credit file, improving their score with every successful payment. If you are able to make your rent payments on time then it is well worth signing up for this scheme; however, you should remember it works both ways – fall behind on your rent and your credit rating will be negatively affected.
At the moment this information only shows up on your Experian credit report, which is one of the three main credit reference agencies used by the majority of finance companies. Tenants have been able to sign up for this programme for the past two years; however, it is only now that this information will be used to update credit ratings. Experian estimate that 79% of those who have signed up to the scheme will be rewarded by a boost to their credit file once this information is
The process of signing up to the Rental Exchange scheme depends on the type of tenant you are and who your landlord is. If you are a social housing tenant then you will need to contact your social housing provider. Currently around 150 providers are already registered with the scheme, and all of their tenants will automatically be opted-in; if you do not want your payments recorded you will have to voluntarily opt-out.
If you are a private tenant you will need to ask your landlord whether they have signed up for the scheme. If they haven’t, you will need to self-register by going directly through one of Experian’s partners either Credit Ladder or Canopy and allow them to view the bank account you make your rent payment from. Your rent will be monitored directly from your bank activity; understandably not everyone will be comfortable with this method, however, this is currently the only option if your landlord is not part of Rental Exchange.
Why is my credit history important?
The best way for a lender to assess your likelihood of being able to handle your finances in the future, is by looking at how you have handled them in the past. A clean credit report showing a track record of payments being made on time makes you much more attractive to other potential lenders as you are seen as less of a risk than someone with defaults and missed payments. This is not just important for obtaining smaller lines of credit such as credit cards and overdrafts, but also helps you secure funding for bigger purchases such as vehicles and property.
If you are currently renting but have hopes of purchasing your own property one day, demonstrating that you have consistently paid your rent on time, will hopefully lead to potential mortgage lenders having more confidence in your ability to handle this type of borrowing.
Improving your credit rating can be difficult without actually taking out credit in the first place. While some people have no problem using a credit card for small payments and paying these off at the end of the month, for others it is not always this easy or even something they feel comfortable doing. Having access to a credit card can prove to be too much of a temptation to some, while others may not have a good enough credit rating to be accepted for a card in the first place. For those in rental properties, the Rental Exchange scheme is a great way of boosting your score and proving your credit worthiness without getting into debt.
The Register of Insolvencies is a public register that documents Trust Deeds until five years after the discharge date and includes personal details.
Joint Trust Deeds don’t exist, however, if you want to run a Trust Deed that encompasses debts as a couple, this will be two individual Trust Deeds.
Our Scottish based team can help advise you on your debt problems.