For many consumers, a confusing part of trying to get a loan is the way that credit begets credit. Banks want to lend to people who’ve proven to be a good risk. Without a track record, getting a loan can be hard or expensive. A new report from the credit bureau Experian shows that many borrowers could benefit if lenders took rental payments into account.
As lenders bounce back from the Great Recession, they’ve been looking at a broader range of non-traditional data to identify more potential-borrowers who could be a good risk. The idea is some people who don’t have regular credit histories but pay their rent, utilities, and other recurring expenses on-time could a good credit risk. In 2010, Experian bought RentBureau, which tracks apartment rents from large property managers.
via If Credit Scores Include Rental History, Good Tenants Win – Businessweek.
To pay your rent on time shows commitment and ought to add extra “credits” when you take the next step to apply for a home loan.
We developed and fine-tuned Rent-to-buy as we call it “Rent2buy”. This product is aimed at the market for current tenants – who want to buy -but are declined due to the strict implementation of lending criteria of the banks since the introduction of the NCA. The rent2buy term is usually between 9 – 24 months long – but can be longer. A formal purchase agreement is also signed to predetermine the purchase price. During the rent2buy period, the buyer pays a higher rental and the extra rent paid – goes towards a credit for his deposit – he now also have time to show he can do his payment – on or before the due date each month – a good track record – as required by a bank – and time to improve his credit score and settle some minor or larger debt to improve his affordability. The rent2buy client then receives a unique mobile ‘app” to assist him to track his day today expenses, receive mentorship and home ownership education – all wile he is renting. Each month a budget report is compiled and the rent2buy client kept motivated to reach his eventual goal – to own his own home.
Most recent rent2buy transactions negotiated – include – Farm = R22 mil, commercial buildings R8 mil and R1,7 mil, holiday home of R2,7 mil and various houses and apartments R299 000 and upwards.