Recent research by Experian among tenants who rent in the private sector found that 96% of them were unaware that they had the opportunity to improve their credit score by paying the rent on time.

This is probably because, although a mortgage payer automatically builds his or her credit score when making their monthly repayments on time, until recently this was not true for tenants.

If a tenant pays their rent on time, why shouldn't that prove their trustworthiness and why can't it be reflected in their credit report? It's not fair that a tenant can be refused a mortgage even though it's obvious from their rent payments that they are a reliable payer.

Political action

This has been noticed in political circles as Britain's broken housing market has risen up the political agenda.

Until recently politicians largely paid lip service to the plight of renters.

But the percentage of homes rented privately has doubled to 4.7 million and this means up to 10 million people are now renting their homes, which is a very large block of voters. And ministers now realise it's a very hot political potato.

"When a generation is locked out of the housing market it hurts us as a country," housing minister James Brokenshire said recently. "It’s the impact it has on the lives of individuals and their families. It’s about social justice, opportunity and building a fairer, stronger Britain."

The current government has been working hard to play catch up. A raft of new laws have been announced and several are already making their way through parliament, most of which are designed to make renting more secure and less expensive for tenants.

This has included:

• Banning fees charged by letting agents to tenants (June 2019).

• Reducing maximum rental deposit allowed to five weeks (later in 2019).

• Introducing a national register of landlords (to come).

• Announcing greater regulation of letting agents.

• Passing a law that sets out a minimum standard of 'fitness for human habitation' for all rental properties.

Why do mortgage payers get the credit?

A mortgage is a loan and, like credit cards and car loans, it is a financial product. As such mortgage repayment histories are recorded by credit reference agencies. Those repayments will help increase the mortgage payer's credit score over time.

But a tenant is not taking out a loan to pay their rent and, while they commit to making payments, rent paid to a landlord is not reported to the credit reference agencies and therefore not included in the tenant's credit report. Until now, that is.

How many people rent versus own their home?

In England, a third of householders owned their homes outright, a third had a mortgage, a fifth were tenants within the private rented sector and the remainder rent in the social rented sector, or what used to be generally referred to as council houses/flats.

Time for change

Tenants using CreditLadder can now improve their credit position when they make on time rent payments. Rent payments can be reported to Experian, Equifax and TransUnion.

Lord Bird, who is sponsoring a bill through parliament that will force all lenders to take rental payments as proof of creditworthiness, recently said: "We’re trying to help reliable rent-payers get the same advantages as reliable mortgage payers.

“Generation rent has been hit hard and they deserve fair access to credit. We want to empower more people to get on in life.”

This may all sound like only small changes, but the implications are huge.

Building your credit score by paying the rent on time can help tenants like you develop the positive credit needed to qualify for a mortgage.

Renter to homeowner

Rents are rising higher than house prices, so it's a good time to become a homeowner, it can be argued.

Now, thanks to CreditLadder's service, every tenant can build their credit position and score, potentially bringing their goal of home ownership closer.

How it works

When a tenant signs up to CreditLadder they can report their rent to all the main Credit Reference Agencies (CRAs) in the UK. This data is registered on your credit file and can count towards your credit score.

Be part of the change

As we said, 96% of tenants aren't aware of how their rent payment can count towards their credit score, but that's quickly decreasing as more and more tenants register with CreditLadder.

Despite the high price of property, 57% of renters still expect to own a home at some point in the future, according to the most recent English Housing Survey.

But mortgages are getting harder to obtain as lending rules have tightened up following the 2007/8 financial crisis.

People now realise they must do everything they can to increase their credit score, and increase their chances of obtaining the mortgage which will allow them to take the first step onto the property ladder.

Let's do it

CreditLadder can help you improve your credit score

If you want to improve your credit position by reporting your rent payments, CreditLadder is the only way to improve your credit score and position across all four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money.

CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.

Remember the information provided in this article is for information purposes only and should not be considered as advice.