Are you a UK renter and struggling to establish some credit? Then, the renting report is one of the simplest and non-debting ways that you may have been neglecting. Your monthly rent is one of the largest transactions you do each month. However, that payment is substantially ignored by credit agencies. But, with the help of budgeting apps, it is now possible to transform those payments into a credit builder with absolutely no credit cards and no loans.
How? Let us examine it more closely.
What Is Rent Reporting and How Does It Work in the UK?
The renters have not gained any advantage in credit building over the years. A person who pays his or her rent on time is less likely to see that effort in his credit score compared to a mortgage owner or a person using credit cards. But with rent reporting, it is possible to report rent payments to your credit history. So, how does it work, and why it can be a helpful tool to you as well? Let’s look at it now.
Turning Your Rent into Credit History
Rent reporting refers to a service by which your monthly rent payments are reported to credit reference agencies. This implies that each time you pay off your rent timely, entries are made in your credit history just like the payment of a loan or a credit card payment. These on-time payments can be later used to establish a good credit history, which in turn will enable you to prove to the lenders that you are a responsible individual when it comes to finances. All this is possible even without using the traditional credit products.
Agencies that Accept Rent Reporting
Three major credit reference agencies exist in the UK, namely Experian, Equifax and Trans Union. When lenders make requests to know how creditworthy you are, they can access any one or all of these agencies. Therefore, the more you appear on these three agencies, the more likely you are to have your loans approved.
Who Should Consider Using Rent Reporting?
Rent reporting is a smart concept that can positively influence many individuals who rent and desire to improve their financial standing without incurring unnecessary debts. It may provide substantial development with a low effort. No matter if you are a first-time user or looking for alternatives of credit cards, rent reporting allows you to build your history with less exposure to risk. Some of the groups that can benefit from rent reporting are indicated below.
- New UK Residents Without a Credit History
As a new resident, you may be unaware that your financial history will not follow you to the UK. Hence, acquiring a contract phone or a lease agreement without a local credit card might be difficult. Therefore, rent reporting gives you an opportunity to create a credit history in the UK with the money you have already paid.
- Millennials & Gen Z Renters Avoiding Credit Cards
A lot of younger renters do not want to spend too much on credit cards. Despite their ability to establish credit, they are risky since they are accompanied by interest rates and debt trappings. Instead, rent reporting allows you to develop credit history without giving up your lifestyle or spending additional cash than you can comfortably afford.
Conclusion
One of the new and alternative opportunities to enhance your credit history is the rent reporting. It can positively help boost your credit in a safe, easy, and comfortable manner by simply telling agencies about the payments you make monthly.