The boss of lettings agent services provider Let Alliance has called into question the accuracy of data being used in rent reporting services.
Andy Halstead, chief executive of the specialist tenant referencing and insurance firm, told EYE he has been looking into systems that allow rental payments to be recorded on credit reports but has been told within the credit referencing industry that such methods are “smoke and mirrors”.
Currently, credit reference agency Experian runs the Rental Exchange service that lets tenants have their rent recorded on their file either directly or through dedicated firms such as CreditLadder or Canopy.
Other credit reference agencies, Equifax and TransUnion, don’t provide such a service.
But Halstead said that while he is supportive of such an initiative, there is no way of independently verifying the data, and questioned whether lenders even look at it.
He told EYE: “Not all lenders will look at an individual’s credit report and I have not come across any who will look at rental payment history when assessing affordability.
“How do you know data on a rental payment is accurate? It is entirely subjective as there is no way of inputting when the rent is due.
“I firmly believe one day it will, but that is not the case now.”
Asa Bentley, operations director at CreditLadder, told EYE that mortgage lenders are already using the Rental Exchange system.
He said: “Lenders see the same credit report as a tenant and those using the Rental Exchange will have a tab representing their rental payments.
“We have heard of tenants being asked for rental history by mortgage lenders.
“Instead of providing it through a bank statement, we have verified it as a third party.”
A spokesman for Experian, which runs the Rental Exchange, said: “We’re in the process of rolling out rental data on to people’s Experian credit reports, which will allow lenders to see rent payment information.
“We partnered with The Big Issue Invest to create the Rental Exchange, and Experian is the only one of the three main credit reference agencies which processes this data at the moment. Many of the lenders we work with are enthusiastic about how using rental payment data can help them make better decisions.”
A spokesman for UK Finance, the trade body for lenders, explained that some may look at credit reports when assessing applications but policies will vary.
A spokesman said: “Lenders are subject to stringent rules set by the regulator, that take into account a customer’s income as well as an assessment of their affordability. The purpose of this is to ensure that the borrower can repay their mortgage over the lifetime of the loan in all foreseeable circumstances.
“The overwhelming majority of new loans are sold under an advised process, during which customers take part in a lengthy interview with the onus being on the lender or adviser to ensure that the mortgage is suitable for the borrower’s needs.”
Comments (12)
Personally I can’t see the point of the Rental Exchange that Experian offers, as the rental performance data would be available through Open Banking
The silence here from the companies peddling this says pretty much everything consumers need to know really.
”boost the rates you get on a mortgage”
In 2 years when consumers are claiming PPI style relief from these companies the screenshots of their webpages will be pretty brutal.
Snake Oil Salesmen.
Can i just clarify the smoke and mirrors (like almost every new idea is).
A mortgage lender will not take into account rent paid FACT even if it is on a reporting system.
The tenants that sign up to it are quite frankly stupid. Because if they are late paying their rent (it happens) it will go against them. So much so could result in a CCJ.
Down side and no upside.
There is also an argument to say a credit report from experian, call credit or Equifax is worth diddly squat. A mortgage lender will not look at these to make a decision.
Its a myth the lenders sit there and look at a generic credit report.
All lenders have a unique set of criteria to pass underwriting which is secret so it cannot be manipulated. Having a 995 credit score with Experian does not mean you will get a mortgage. The scores and banding these “credit agencies” have are made up by them. it means naff all.
These cards to “rebuild” credit do very little to actually rebuild credit. In the main its down to time to heal it.
My point is that claims like this; “We help you gain better rates on mortgages, loans & utilities, whether your landlord uses Canopy or not” made on the Canopy web site are misleading. The integrity of rental payment data is the issue, until there is a way of making this data as credible as that provided by financial intuitions, it will not help tenants to secure credit. If rent is paid every month, however paid late, how would this be recognised? Just take a look at your own credit report, the amount of data and the accuracy of the data is impressive. Absolutely none of the data is subjective. For example, credit card companies know exactly when payments are made and they report this data, same as loan companies and mortgage companies. Rental payments are subject to a tenancy agreement and there is no such data base. Call Credit, Experian and Equifax are custodians of the data, they do not own it and they do not add to it, only financial institutions do this.
Hi,
I would welcome a discussion on how we may be able to support Mr. Halstead and Let Alliance with rent reporting. I believe this would clarify any uncertainties to form a more informed view and I will be reaching out personally today.
At CreditLadder the quality of the data that we report to Experian is of utmost importance to us and is something that we take very seriously. We have built a robust platform drawing on a wide range of operational, property, credit and risk expertise under strict guidance to deliver the UK’s leading rent reporting service. We recently won backing from HM Treasury as a final stage winner of their Rent Recognition Challenge as validation for service. Please also see our Trustpilot reviews for verified feedback from our users for further validation.
For the benefit of the readers below is the objective process used to achieve accurate rent payment reporting:
– Tenancy information is input by the tenant when registering with CreditLadder. The tenant then links their bank to CreditLadder through an FCA approved partner for read-only access.
– We perform ID and tenancy checks on the tenant’s application. We also ensure that the agent/landlord can confirm tenancy information once a tenant requests to join.
– We then read the rent from the tenant’s bank and report the rent to Experian monthly which then appears on the tenants Experian Statutory Credit Report.
This method of rent reading and reporting is more objective than say a previous landlord reference which could be open to fraud. We do not, however, rely on technology alone. We combine leading technology with a customer advisory team who deal with application processing, customer support and fraud detection.
I trust this clarifies any uncertainties and you can rest assured this is an objective and robust method of rent reporting.
We have lots of exciting announcements coming with the aim of helping more tenants to have their rent recognised. We are working with new agents daily so if you are interested in helping your tenants then please do get in touch via our website.
Kind regards,
Asa Bentley
Operations Director
CreditLadder
I see looking at your site that tenants can pay £5.75 per month for this service…. so I’m assuming you have some data then about how many tenants have ACTUALLY got better rates on mortgages then? Especially through your partnership with Experian.
I would love to know. Has anyone ever got a better mortgage rate after using your service?
https://www.creditladder.co.uk/tenants
Assuming CreditLadder have not made changes to their website since you looked at it Light, actually, it’s free to sign up for the rent payment report to Experian. Tenants can choose to pay from £3.25p/m to get cinema discounts and a free coffee (…).
Hi,
Rent Recognition is in its early stages at the moment but it will become the norm soon.
We, at Rentalstep, are pioneering new, accurate and objective ways of recording on-time rent payments which give confidence to lenders to use the data in their affordability and credit checks.
We owe it to our tenants to ensure their rent payments help improve their credit files and so I welcome input from Andy Halstead, or any other letting agent, that support this goal.
Thanks,
Mike
You’ve dodged the point. Have ANY of your tenants/users/clients ever got a better mortgage using your service?
…
I said this month’s ago when it was first ‘Reported’ on.