Can rent affect your credit score?

Maybe you’ve been in this position: You pay your rent on time for years. But when you move to a new tenancy agreement, or apply for a mortgage, even with lower monthly payments, you’re declined because your credit history isn’t strong enough. Doesn’t seem fair, does it?

You’ve shown you can make reliable payments to your landlord or local housing association. The problem is new landlords and credit lenders don’t see those payments reflected on your report.

We’re digging into how your credit report can impact your rent and how your rent can affect your credit. Read on to find out if you can rent with a low credit score and how to use your rent to build your credit the easy way.

Can not paying rent affect your credit score?

Missed or late rent payments do not automatically appear on your report. Meaning new landlords won’t be able to see them so it shouldn’t impact on your ability to rent.

However, it can be listed on your full report if the landlord you owed money to handed the issue over to a debt collection agency. Because this will very likely be reported to one (or all) of the credit reference agencies (CRAs) — Experian, Equifax and TransUnion — it could leave a mark on your report and have a negative affect on your ability to get a loan, mortgage or a credit card in the future.

Another way that a missed or late rent payment could show on your report is if you’re using a rental reporting service.

These services report rent payments from your bank account in order to show that you can reliably make your payments on time. They work with some of the CRAs to let them know about your rent.

Can paying rent help your creditworthiness?

Not unless you are using a rent reporting service. If you do this, and show a good history of using credit, then mortgage lenders can use this information when they consider lending to you.

Landlords aren’t considered to be creditors, so they are not required to report your rent to CRAs, which is why you would need a rent reporting service to act as the middleman.

At Loqbox, we’re all about helping people build credit and achieve financial freedom, whatever that looks like for them. Our members have the option to strengthen their credit history with rent payments through our reporting service. 

Join Loqbox, securely link your bank account, tell us when your rent comes and how much you pay, then we’ll do the rest. Head to this page to see how it works. ‍

‍It doesn’t matter if you pay your parents, a private landlord, a letting agent or your local council – we can identify your lump sum payment every month if you tell us how much and around which day of the month to expect it. Plus, you can let us know any time if your circumstances change.We report your regular rent payments to Experian (one of the main CRAs in the UK) which can build your credit history – making it easier to apply for credit cards, loans and mortgages in the future.cards, loans and mortgages in the future!

Can you rent with a low credit score

Short answer: yes! The good news is that there’s no minimum score needed to rent a property. You may even be able to rent without a credit check happening.

It’ll depend on their tenancy criteria, but when entering into a tenancy agreement, landlords/letting agents sometimes do a soft credit check. But what they see isn’t your full credit history. They may separately do an affordability and reference check. But when it comes to your report, landlords are only able to look at certain information.

Your public record will show landlords your electoral roll listings and court records, like county court judgments (CCJs) and bankruptcies. If you have a strong electoral roll listing (make sure your previous addresses are correctly listed) and there are no court records suggesting financial difficulty in the past, it’s unlikely that you’ll have any problems with your credit check.

Having a CCJ or a bankruptcy doesn’t necessarily mean that you will be rejected for a tenancy. But it may be a consideration for the landlord. 

It will come down to how willing they are to enter into an agreement with you. And remember, CCJs and bankruptcies disappear from your report after six years.‍