Council tenants in Renfrewshire are to become the first in Scotland to benefit from a scheme allowing them to build up a positive credit rating and avoid unreliable lenders.
The Rental Exchange Project, a joint project with The Big Issue and Experian, will allow tenants to build a credit profile and access mainstream and cheaper finance, avoiding loans sharks and other unregulated lenders.
Previously, social rented sector tenants could be turned down or have to pay more for goods and services because they have no credit history.
The project uses rental payment data to build a credit score, in the same way that mortgage history can count towards credit history for homeowners. This can be used as proof of financial standing and reliability which can help with online shopping, better mobile phones rates and better gas and electricity rates.
Councillor Tommy Williams, Convener of Renfrewshire Council’s Housing and Community Safety Policy Board, said: “Lots of companies rely on credit ratings to decide whether or not people can access things like mobile phone contracts, bank accounts and affordable loans. Council and housing association tenants, however, would often be refused or charged higher rates because they tended to have a low credit score.
“This innovative project allows tenants to build their credit rating based on their rent payments which means they no longer have to turn to more expensive or less secure forms of lending.
“This will make a huge difference to our tenants, many of whom are already struggling to pay rising costs for things like fuel bills so we are delighted to be the first council in Scotland to sign up to this scheme.”
Nigel Kershaw OBE, Chairman of The Big Issue Group, said: “There are hundreds of thousands of social housing tenants in Scotland who are excluded from affordable credit.
“All we are asking is for a level playing field where regular rent payments create a credit and digital footprint in the same way mortgage payments do. It’s great to see Renfrewshire Council take the lead in Scotland and, through the Rental Exchange, set out to tackle the financial, digital and social exclusion faced by social housing tenants head-on.”
Jonathan Westley, Managing Director of Consumer Information Services at Experian UK & Ireland, added: “Renfrewshire Council is clearly working hard to help their tenants overcome financial challenges and now they have become the first council in Scotland to sign up for the Rental Exchange.
“Sharing information on their rent payments will make a real difference to tenants suffering social and economic hardship. The inclusion of rental information in future credit reports will significantly improve the level of insight available to help credit providers assess affordability and help social housing tenants more easily demonstrate their creditworthiness.”
There is no cost to the council or tenants for participating in the Rental Exchange Project.