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Time for Renters to get the Recognition They Deserve

The rise of ‘Generation Rent’ is well documented, along with the spiralling rent payments they are facing during a tightening cost of living crisis. 

What’s less well known is that rent payments often make no impact on their credit score. But Open Banking has the power to change this.

The number of households renting has more than doubled over the last two decades in England and Wales, with home ownership rates falling fast.


The average UK tenant spends more than 28% of their pay before tax on rent which means that people are spending more of their wages on rent than at any other time in the last 10 years. 

And average rents for new lets have also risen, increasing by an eye-watering 10.4% in a year. To cap it off, private rents rose faster in June 2023 than they have since records began back in January 2016.

It’s a rather bleak, and expensive, picture for renters right now. 

With 92% hoping to one day own their own home, they would at least hope the increased fiscal responsibility ensures their credit score is in good shape when applying for a mortgage.

Making better use of data

Unfortunately, that’s not commonly the case. 

Landlords and housing associations aren’t typically classed as lenders or creditors, and therefore not considered by Credit Ratings Agencies (CRAs). So rent payments won’t contribute to improving a renter’s credit score.

It’s a hard pill to swallow for hard-pressed renters up and down the country, who may well be making all their rental payments in full, and on time, only to find out it’s irrelevant when it comes to securing the loan needed to climb the first step on the property ladder.

It’s not all doom and gloom. Earlier this year the UK surged past 7m Open Banking users and one of the most compelling use cases that’s gaining traction is Rent Recognition, which can help consumers improve their credit scores or affordability by demonstrating the regular rental payments they are making.

Rent Recognition harnesses Open Banking technology to drive financial inclusion by offering everyone a newer, simpler, and fairer way of building up their credit score so they can get the credit they deserve.

Our Rent Recognition feature, for example, interfaces with CRAs, such as Experian, offering them alternative credit data which can help people build up the financial reputation they need to access products and services. 

It’s made it simple to send anonymised details of rent payments that will positively contribute to users’ credit scores, whilst minimising the data shared to protect privacy.

Clients who power their own apps with Moneyhub, such as LOQBOX and The Big Exchange, can now give their users this ability to safely provide details of rental payments to leading CRAs, whilst consumers who use the Moneyhub app also benefit from the same ability.

Increasing the visibility of those with thin files

Rent Recognition is part of a much wider trend, with CRAs increasingly turning to Open Banking-fuelled alternative credit data to provide more holistic and accurate creditworthiness assessments. 

Traditional credit scores exclude a large section of the population who have thin credit files. 

It’s estimated there are currently around five million people in the UK, including a large number of renters, who are invisible to the incumbent credit scoring system. Credit scores are therefore often out of date or incomplete, so fail to demonstrate true affordability.

For Britain’s businesses, making lending decisions based solely on traditional credit scores increases risk and restricts lending, excluding potential clients and limiting revenue. And for the consumers afflicted by thin files, getting access to financial services is difficult and often more expensive. 

Being able to properly demonstrate creditworthiness improves financial wellbeing whilst minimising the cost of accessing services. Rent is the most significant outgoing for millions of people, and must play a bigger role.

We see Rent Recognition as a crucial part of our mission to bring the benefits of Open Banking to as wide an audience as possible.

By exploring the feature and incorporating it into their apps, businesses can join us on the journey and offer their customers the same credit score-boosting ability. 

By helping users to track and report rent payment behaviour, they will help them to ensure they are eligible for a mortgage in the future.

That first tentative step on to the property ladder now seems much less daunting.

* Kim Jenkins is Managing Director of Moneyhub Enterprise *


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