Most home buyers are aware that a good credit score is a vital part of being approved for a home loan – and that this score is based mostly on their history of paying their bills in full and on time.
What many of those who are currently still tenants don’t know, however, is that their rental payment history is not automatically reported to the credit bureaux that compile their credit scores. “And with rent being a major monthly expense, the omission of that history could well cost them their dream home one day,” says Rudi Botha, CEO of BetterBond..
“Recent research by one of the biggest credit bureaus found that only about 50% of tenants’ rental histories were being reported – and that the credit scores of 80% of tenants improved when rental payment records were included in the calculations,” he notes.
“This is why it is important to rent only through a professional agency with systems in place to automatically report rental payments to a specialist credit bureau such as PayProp or TPN – or from a private landlord who participates in an official rental reporting programme.”
Botha says credit histories and scores are generally obtained from one or more of the four major credit bureaus in SA - Experian, TransUnion, Compuscan and XDS – and that they can also incorporate a record of rental payments into their reports, provided that they can obtain the necessary information. For example, TPN shares rental repayment records with Experian.