Paying rent to count towards your credit score

Credit referencing agency Experian has just announced that renting will soon count towards building your credit score.

That means if you pay your rent on time each month, it could help improve your score and make it easier to get better deals on things like loans, credit cards or even a mortgage.

Edu Castro, Managing Director of Experian Consumer Services, UK & Ireland, said: “The way people manage their money has evolved, and our score has evolved too.

“Our new Experian Credit Score better reflects more of the everyday financial behaviours that matter - like paying rent or reducing overdraft use – offering a clearer understanding of the information on your credit report.”

Let’s break down what’s changing and what it means for you.

What’s new with Experian’s credit score?

Experian is rolling out a new scoring system that looks at more of your everyday money habits. Here's what the credit referencing agency will be looking at when calculating your credit score from now on:

• Making regular rent payments every month
• Keeping up with your phone contract payments
• Using credit responsibly by reducing overdraft use and avoiding credit cash advances

The score range has changed too, going from 0 to 999 to 0 to 1,250. The new bands will be broken down as follows:

• 0 to 640 – Low
• 641 to 860 – Fair
• 861 to 1,000 – Good
• 1,001 to 1,120 – Very good
• 1,121 to 1,250 – Excellent

Experian says these changes will offer clearer insights into what affects people’s credit scores.

Why is this happening?

Experian is making these changes to help your credit score reflect more of the everyday money habits that matter, like paying your rent on time and using credit responsibly. These changes will give lenders a better picture of how you use your money and you'll get a clearer idea of how likely you are to be accepted for credit.

With the new changes, you’ll now be able to see your positive behaviours reflected in your credit score. You’ll also have a better idea of whether you’re likely to be accepted for credit as a result.

When is this change happening?

The changes are being rolled out starting this month and it’s expected all UK customers will have access to the new credit score by the end of the year. Existing Experian customers will receive an email once their new credit score is available.

How can I boost my credit score

There are steps you can take if you're looking to boost your credit score. These include:

• registering to vote - being on the electoral roll helps lenders find you
• paying bills on time - even small payments like phone contract bills count now
• not applying for too much credit at once - this can make you look risky to lenders
• keeping your credit use low - try not to use all the credit you have
• checking your credit report - check with a credit referencing agency to make sure the information on your file is correct

It can take a few months to see changes, so keep going and check your progress regularly.

If you’re struggling, our thinkmoney Smart account comes with features like Smart Budget which are designed to help you keep your spending on track so you can boost your credit score over time.