If you are a first-time buyer, it can be a daunting task getting a mortgage. If you have not borrowed money before, you may not have built up enough of a credit history to satisfy lenders.
But a change in the way that credit reports are calculated might help you out.
One of the UK’s three credit reference agencies is set to take consumers’ rent payments into account in credit reports. Experian is launching Rental Exchange to include tenants’ rental history, in the hope that it will strengthen their credit ratings. (Rent payments will only be included in reports with consumers’ permission).
This means that if, like most first-time buyers, you have been renting for some time – that could now count towards your credit history.
Of course you need to pay your rent on time, although Experian have said that in the case of genuine disputes over a missed payment, the information will not appear on a tenant’s record until it is resolved. The company will also safeguard credit records from being affected by late payments of housing benefit.
This is a positive move from Experian. For many people who have not yet built up a credit profile, this is a chance to improve their ranking. It will also emphasise to tenants the importance of paying rent on time. Their payments will, in effect, be like a mini mortgage.
For more advice and help getting a mortgage for the first time, contact us at Limetree. We are happy to help in any way we can.