However, many private renters are misguided on what actually contributes to their credit score and thus may not be taking the correct measures to improve it.
New research from Canopy, has shown that 41% of private renters believe having a regular salary impacts their credit score, when in fact, it has no bearing on it whatsoever, while 38% also believe having a job does too.
Other factors that private renters believed impacted their credit score are, staying with the same bank (27%) and even switching banks (15%). Surprisingly, 6% believe having children contributes, with 4% also believing lending money to a friend can affect their score and 3% of renters even thought owning a pet would impact their credit score. Perhaps more surprisingly, 27% of private renters are totally unaware of what their credit score is.
There is a clear agreement from the majority of private renters though as 70%, who have always paid their rent on time, believe their rental payments should count towards their credit score, while 35% believe it already does. Canopy is in agreement with this, which is why they developed their Rent Tracking service. Canopy’s Rent Tracking reports rental payments to credit reference agencies, in turn, helping to build a renter's credit score with payments they would be making anyway.
Chris Hutchinson, CEO of Canopy commented: “Getting on the property ladder is an incredibly competitive endeavour and one which potential homeowners will need to be as financially fit as possible for. Raising the necessary funds for a deposit, while improving financial wellness can be a difficult task, which is why giving renters a helping hand by ensuring their rental payments work towards improving their credit score can be so important.
“With 27% of private renters unsure of what their credit score is, Canopy’s platform can prove invaluable. Not only will rental payments be tracked, but users will also be able to view their credit score with the different credit reference agencies and have all the necessary information in one place to show to a mortgage adviser as, and when, they feel ready to take their first steps on the property ladder.”