Launched in 2016, CreditLadder is a scheme which helps tenants to improve their credit score. This can be difficult whilst renting. The scheme reports rent payments to the main Credit Reference Agencies. CreditLadder is the only way tenants’ payments can be sent to all four main UK Credit Reference Agencies. These are: Experian, Equifax, TransUnion and Crediva. CreditLadder securely reads the rent payment from tenants and will automatically inform credit agencies.
Is my bank accepted?
The sign-up process takes under 5 minutes. The three simple steps include entering your details, connecting your bank, and paying your rent as normal. Is your bank supported by the scheme? The supported banks are: Bank of Scotland, Barclays, Chelsea Building Society, Danske Bank, First Direct, Halifax, HSBC, Lloyds Bank, MBNA, Monzo, Nationwide, Natwest, Revolut, Royal Bank of Scotland, Santander, Starling Bank, Tesco Bank, Tide, Transferwide, TSB, Ulster bank, and Yorkshire Building Society.
How much does it cost?
CreditLadder allows tenants to report rent payments to one of Experian, Equifax or TransUnion for no charge. There are also paid plans available. These offer tenants the opportunity to gain maximum benefit by reporting to all four major credit agencies. A yearly subscription costs the equivalent of £5 a month, or a monthly plan is £8.
Am I eligible?
All UK tenants renting from a private landlord can sign up. Once signed up, CreditLadder will confirm with your landlord that you are a tenant. There are no benefits for private landlords, however there are many potential benefits for tenants. For example, mortgage lenders will research into how credit has been managed in your past when applying. Rental payments made on time and noted by CreditLadder support a good credit rating.
Are there disadvantages?
There is no guarantee that CreditLadder will improve your credit score. ‘Bad marks’, for example, if rent is paid late for any reason, would damage your rating. However, this would not negatively impact tenants who pay rent on time each month. Although there are benefits for tenants, there are no clearly stated benefits for landlords. Except that tenants signed up to the scheme are likely to be reliable payers. This provides landlords with further reassurance that their tenant will pay their rent on time, as they have an incentive to do so. The free plan only allows your payments to be reported to either Experian, Equifax or TransUnion. There is a monthly/yearly fee if you would like your information to be reported to all four of the main agencies.
Credit Rating
The potential lenders are able to see your rent payments. This means paying rent on time each month supports tenants showing themselves as reliable. IN turn this can potentially help in the future with applying for a mortgage. CreditLadder could be useful for those who don’t have a credit history yet, and therefore would struggle when applying for a mortgage. The idea behind the scheme is to help individuals build a credit history, taking into account their rental payments and access more affordable credit options – i.e., mortgages.
According to Experian, 79% of tenants would benefits from the scheme, in other words, their credit score would increase. However, this would only occur if the lender(s) decide to take rental data into account. This is not seen as standard practice in the UK as of yet although many lenders are discussing it. Ultimately, keeping up to date with rent payments and paying rent on time can demonstrate to future lenders that you are reliable.
Sign Up
As well as helping tenants to build a positive credit history, it also helps tenants to prove their identity online. With a good credit history and credit score (which CreditLadder helps with), it is possible to access cheaper rates on loans, credit cards and mortgages. The signing up process is easy. There is a free option available if you do not want to pay and would only like your payments to report to one agency.
To sign up and for further information, please visit https://www.creditladder.co.uk/tenants. If you would like advice, our team is here to help. Please contact your local office on:
Julia looks after all of our marketing communications, printed material, design, branding, publications, digital marketing and advertising. She has worked across a number of industries in marketing roles and outside of work, if usually found on a netball court or coaching from the side lines.
