Make paying rent enough proof that you are able meet mortgage repayments

It would be wrong not to write about the above petition that is doing the rounds on social media this week. Here's a link by the way.

Let's get analytical and dissect the headline quickly. Behind it is something very unfair that renters in the UK have been suffering for years, that is the fact that no rental payment history has been included in credit reference agency data in the UK until very recently.

What this means is that when someone with a mortgage applies for credit there is more data about them than there is when a renter applies for credit. More data, if it is positive data, means a better, higher credit score.

So do all mortgage holders have higher credit scores than people that rent? No, but if Fred and Frank are the same age, live on the same street and each have credit cards with the same repayment history they can have significantly different credit scores if Fred pays £1200 each month in rent and Frank pays £1000 each against his mortgage. In this case it would be Fred, who rents, that has a worse credit score because his largest outgoing will be unrecorded.

A mortgage company could never use consistent rent payments as the sole indicator that someone can afford a mortgage though. Mortgages expensive to set up and ultimately seriously expensive if something goes wrong and repossession is necessary (although that doesn't actually happen that often). In assessing applicants, mortgage companies use a great many data points to ensure the mortgage is affordable. Of course rent payments should be part of that risk assessment and truth is mortgage companies think that too.

At PAID & CO the rent payment history thing is not our sole purpose but it is something we're passionate about. We've been talking to credit reference agencies and as soon as we're up and running with a good number of tenants choosing to share their payment history we'll be sharing it with those agencies that are able to guarantee it will go straight onto people's credit reports and start making a difference.

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