Online research from Equifax, the consumer and business insights expert, reveals Brits want lenders to take factors, such as rental payment history, into consideration when it comes to applications for credit. Four in five Brits (80%) think lenders should consider their rental payments when it comes to approval or rejection on credit.

The survey, conducted with YouGov, shows nearly half of renters (48%) never expect to own their own home.  Not being able to afford the deposit (45%) topped the list of reasons renters feel unable to become home owners, almost two in five (38%) don’t believe they would be approved for a mortgage, and 32% say they wouldn’t be able to afford the monthly mortgage payments.

When asked to imagine they were buying a house, 29% of renters said they’d expect to be able to get a mortgage with payments similar to their current monthly rental payments, while a quarter (25%) believe they could access a mortgage with monthly payments higher than their rental payments. In reality, renters will not necessarily be approved for a mortgage with similar monthly repayments than their rental payments, as lenders have to account for additional expenses such as home insurance, and potential interest rate rises. Only 17% of renters expect this to be the case.

Homeowners are much more confident they’ll be able to get credit than renters, 41% expect it to be very easy, compared to 11% of renters. Nearly a third (31%) of renters have been turned down for credit, compared to just 14% of home owners. For renters who’ve been denied credit, almost half (48%) were told by lenders that they didn’t have a high enough credit score, 24% stated there was an issue with their credit report/history and two in five (20%) said they didn’t have enough income/couldn’t afford the credit.

Following an unsuccessful credit application, 61% of renters said they would have liked information about why they weren’t accepted. The survey also found following an unsuccessful application a quarter (25%) moved onto another lender, but 53% chose to undertake no further action – implying people abandon their plans to access credit after an initial decline .

Laura Hales, European Head of Product - Credit and Risk at Equifax UK, says: “There are 14.8 million renters* in the UK and according to the Resolution Foundation, up to one third of millennials could be renting for life**. Our research highlights the serious challenges renters face when it comes to seeking credit, whether they’re trying to get onto the housing ladder or take out a new mobile phone contract. Currently rental payment history isn’t necessarily reflected in people’s credit reports and in today’s society that must change. 

“This issue is exacerbated further in the social housing sector, where by allowing lenders access to rental and other payment data, such as council tax, tenants’ access to affordable credit can be greatly improved. Our own research*** has confirmed including this data would improve a third (33%) of all tenant’s credit score. While for those who have the thinnest files (0-2 accounts), our analysis showed almost seven in 10 (69%) of tenants’ credit scores would see an improvement.”

“Exciting progress is being made to enable this data to be collected and shared and we’re working closely with providers of rental data apps, lenders and policy makers to increase coverage. As consumer awareness continues to grow and more data become available we’re confident there will be a fundamental shift that allows more people to access credit when they need it.”

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Notes to editors:

All figures, unless otherwise stated, are from YouGov. Total sample size was 2,028 adults. Fieldwork was undertaken between 31st August - 3rd September 2018. The survey was carried out online. The figures are representative of all GB adults (aged 18+).

*https://www.fca.org.uk/publication/research/financial-lives-consumers-across-uk.pdf

**https://www.gov.uk/government/statistics/family-resources-survey-financial-year-201617

https://www.resolutionfoundation.org/media/press-releases/up-to-a-third-of-millennials-face-renting-from-cradle-to-grave/

***Equifax own analysis of over 27,000 real life credit files of UK adults who rent social or affordable housing