Rent going on credit file - do I have to ask my landlord about this?

BanburyCross

My husband and I are looking to purchase our first home in the coming year. We have good credit scores, but our first application was turned down because of a few late payments on a credit card. The credit card was paid off and cancelled, but right now it's counting against us.

Our mortgage advisor said to just sit tight and in 6 months without us doing anything we should be fine. I came on this site to look up further info and found the article about rental payments going on your credit file. For us this would be fantastic because it's our biggest expense and we never miss a payment.

I'm unclear if we have to do anything though - the article mentions it needs to be in your contract so do I need to go to my landlord and ask for something to be added to our contract? If so, what should it say? We are about to renew our contract this week, so any advice would be greatly appreciated!

Tixy

So far the take up on reporting rent payments has been low.

Your landlord may not be willing to pay/subscribe to experian's services just so they can report your rent payments. If your landlord is a large organisation they may have already registered and it could be in your new contract.

How recent are the late payments showing on your files? You mention that card was cancelled - do you have some other existing credit accounts to maintain an ongoing credit history?

BanburyCross

Thank you for replying

Oh I see, I didn't realise it was something that would cost the landlord money. We rent through a lettings agency though, so I will ask them if they are planning on putting it into new contracts.

The card was cancelled nearly 3 months ago, and the missed payments were the last 6!! We had a problem with our current account, DDs all got cancelled (bank's fault, not ours!) but then this credit card didn't get its DD set up again, and we missed it because when we last moved the husband didn't update the address on the account, and was such a small amount we just didn't notice and forgot about it. Oops.

I have a credit card, but because I'm self-employed and about to take maternity leave, I'm not going to be on the mortgage application. Our mortgage advisor said that we can just sit tight and do nothing for 6 months and then we should be fine, but I did wonder if we should maybe do the weekly shop or something on my husband's other credit card (which has nothing on it at the moment) and pay it off in full each month. But then reading this site, it says paying off in full each month makes you less attractive too because there's no profit to be made. Confused!

Tixy

I would keep using husband's card and repaying it in full each month. He doesn't need to spend much on it, just a couple of transactions a month.

But then reading this site, it says paying off in full each month makes you less attractive too because there's no profit to be made.

Thats often debated on these forums - as the card company would be making money in transactions fees everytime he used it anyway.

But regardless the profit element wouldn't be relevant for a mortgage application.

BanburyCross

Sorry, I didn't quite explain myself too well! What I meant was that if you have a perfect history of never missing any payments, then the lender may think there's no potential for profit because they won't get any late payment fees out of you. A friend suggested putting something like a few hundred pounds on the credit card, then paying the minimum on DD every month so you're not getting rid of the debt in full each month, but you're showing you can keep up repayments on a regular basis.

Tixy

Credit card companies don't make their main profits from late payment fees. If nobody ever was late with payments they would still make profits.

Mortgage companies certainly don't want to see you making late payments on credit cards.

Paying the minimum payment on DD will waste money in interest and minimum payments are often now flagged on credit files (and generally considered a bad thing by potential lenders).

BanburyCross

Oh ok, I thought if a mortgage company saw say, a couple of late payments over a longish period, they would think "this person is mainly reliable but there's an opportunity to make a few extra quid out of them as there's a chance they might miss one or two payments."

If you see what I mean!

I didn't know minimum payments were flagged on credit files! That must be counting against me on mine then. We won't do that if we start using husband's card again, thanks for that info.

Waino696969

I wish my landlord reported to experian. I've been paying £1200 rent on time, every month for over 4yrs. It's so frustrating that mortgage lenders don't perceive that as a good payment history, particularly when it's more than the mortgage payment would be.

Buzby

A company that has a lot of renters will use the system to vet applicants, and in return get to check files. An individual LL will not have the turnover or back office systems to provide the data required.