Experian includes rental payments in credit score under major overhaul: "A mistake could cost you more on your borrowing costs"

EXPERIAN is including rental payments in its credit score under major overhaul – with experts warning: “A mistake could cost you more on your borrowing costs."

It is introducing a new credit score that it says better reflects how credit applications are assessed, it was announced today. 

The updated score includes new data, such as rental payments.

Experian says the new score will not affect someone’s ability to get credit.

Eligibility for things like mortgages, loans, or credit cards remains the same. 

The updated score provides a more detailed view of people’s financial track record and the new information that banks and lenders have started using, offering new ways to strengthen it over time.

Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, warned that people need to be “savvy”.

He continued: “Borrowers will need to be more 'savvy' with their finances, as this improvement to the Experian Credit Score will include more elements that can both improve and be detrimental to any individual's score. 

"Rent paid may now be a factor in your score, along with your use of overdrafts and other essential utility bills or mobile phone costs. Ensuring all these facilities are set up on direct debit is crucial to keeping up to date with payments, and none fall through plain, silly sloppiness. 

"A mistake could cost you more on your borrowing costs, not only for mortgages but other credit facilities. Even a small amount of poor money management may result in declined mortgages, having to use specialist lenders that will charge much higher rates for the sake of too much Klarna activity, or not paying the minimum amount on your credit card for a month or two.”

Ranald Mitchell, Director at Norwich-based Charwin Mortgages, said the move was positive.

He added: “Experian continues to lead the way in credit profiling, and this is another strong step forward in helping lenders, brokers and consumers gain a more transparent view of applicants and their financial behaviour. 

"By incorporating real-world data such as rental payments, the new score better reflects how people actually manage money day-to-day. It’s also impressive to see Experian integrating innovations like income verification, enabling applicants' incomes to be confirmed instantly without payslips. 

"These advancements show Experian modernising faster than its competitors and aligning more closely with how credit decisions are really made in today’s market.”

Dariusz Karpowicz, Director at Doncaster-based Albion Financial Advice, gave some advice for borrowers.

He added: “Your credit score just got a reality check. Experian's revamped system now counts your rent payments and everyday bills, painting a fuller picture of how you actually handle money, not just how you juggle credit cards. 

"This cuts both ways. Pay your rent on time, keep those direct debits running smoothly, and you'll build your score faster than before. But slip up on your mobile bill or lean too heavily on Klarna, and you'll feel it. 

"Set up direct debits for essentials, track your spending properly, and think twice before using buy now, pay later services. Technology speeds up lending decisions for reliable borrowers, but it also catches every financial stumble.”

Rob Mansfield, Independent Financial Advisor at Tonbridge-based Rootes Wealth Management, said it was a “great idea”.

He continued: “This is a great idea to help educate people on their credit records and provide hints to show the path for individuals. 

"Our financial lives are getting more complicated so it's right that the likes of Experian develop their tools and react to society.”

Darryl Dhoffer, Founder at Bedford-based The Mortgage Geezer, added: “Could Experian's higher score yields provide better terms, potentially leading to increased access to unsecured debts with this new score up to 1,250 - that's my main worry. 

"Mortgage lenders typically use their own credit scoring systems and won't solely depend on Experian's metrics, so not sure if lenders will incorporate these enhancements. Lets see what lenders do, but I'm not hopeful they will integrate.”