For many, private rental is a necessary palliative between life with family or with guardians and home ownership. Renters often work towards buying their first home, saving for a deposit while meeting their rental payments and trying to get a good enough credit score for a mortgage.
However, many private renters are wrong about what really contributes to their credit score and therefore may not be taking the right steps to improve it.
A new study by Canopy has shown that 41% of private renters think having a regular salary impacts their credit score, when in fact it has no bearing on it, while 38% also think that having a job has one too.
Other factors that private renters say impacted their credit score are staying with the same bank (27%) and even changing banks (15%). Surprisingly, 6% think having children helps, 4% also think lending money to a friend can affect their score, and 3% of renters even think owning a pet would impact their credit score. Perhaps more surprisingly, 27% of private tenants have no idea what their credit score is.
There is clear agreement from the majority of private tenants, although 70%, who have always paid their rent on time, think their rental payments should factor into their credit score, while 35% think that it’s already the case. Canopy agrees with that, which is why they developed their rent tracking service. Canopy’s rent tracker reports rental payments to credit reference agencies, which helps establish a tenant’s credit score with the payments they would make anyway.
Chris Hutchinson, CEO of Canopy commented: “Climbing the property ladder is an incredibly competitive business and one for which potential owners will need to be as financially fit as possible. Raising the necessary funds for a deposit, while improving financial well-being can be a difficult task. , which is why helping out tenants by making sure their lease payments help improve their credit score can be so important.
“With 27% of private tenants unsure of their credit score, Canopy’s platform can prove invaluable. Not only will rental payments be tracked, but users will also be able to view their credit score from various credit reference agencies and have all the necessary information in one place to show a mortgage advisor as they feel ready to take their first steps on the property ladder.