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 score isn’t high enough. Doesn’t seem fair, does it?
You’ve shown that 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 credit report.
Don’t worry! Loqbox is digging into how your credit score can impact your rent and how your rent can affect your credit score. Read on to find out if you can rent with a low credit score and how to use your rent to build your credit history, the easy way.
Can you rent with a low credit score
Short answer: yes! The good news is that there’s no minimum credit score needed to rent a property. You may even be able to rent without a credit score 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 credit 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 credit report after six years.
Can not paying rent affect your credit score?
Missed or late rent payments do not automatically appear on your credit 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 credit 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 the CRAs, which could in turn, 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 credit 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 credit reference agencies:Experian, Equifax and TransUnion, to let them know about your rent.
Can paying rent help your credit score?
Not unless you are using a rent reporting service. If you do this, and show a good history of using credit (aka. credit history), 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 credit reference agencies. Which is why you would need a rent reporting service to act as the middleman.
At Loqbox, we’re all about helping people to build their credit, while taking care of our members at the same time. So we focus on building credit history with rent payments, because we understand that a good credit history has a positive impact on your credit report.
If you want your rent to count towards your credit history in an easy way, you can get started with Loqbox Rent. All you have to do is securely link your bank account and tell us when your rent comes out and how much you pay, and we’ll do the rest!
With Loqbox Rent, 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. And 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) and that can build your credit history – making it easier to apply for credit cards, loans and mortgages in the future!