At the end of September the Financial Inclusion Commission published a report by Policy in Practice claiming that the incorporation of rent payment data into the credit referencing system would improve access for tenants to lower cost credit. And tomorrow, the House of Lords is set to discuss a Bill put down by the Crossbencher, and founder of the Big Issue, Lord Bird, which would make it compulsory for lenders to take account of “rental payment history and council tax payment history when assessing a borrower’s creditworthiness.”
However, in our view the sharing of rent, and indeed Council Tax repayment data, could be dangerous for people who are struggling financially – increasing their level of exclusion or raising the cost of credit that they will have to pay. It is necessary to pause the drive to rent and Council Tax data sharing pending a much more rigorous evaluation of it pros and cons. For that reason, we are writing to Members of the House of Lords and asking that they oppose Lord Bird’s Bill.
Commenting on Lord Bird’s Bill, CfRC Director, Damon Gibbons, said:
“The evidence base for sharing rent and Council Tax data with credit reference agencies, and through them the wider credit industry, is flimsy at best. Adverse impacts – such as worsening credit scores for people in rent arrears – have routinely been played down, and the benefits for people with good payment histories overstated. A much more rigorous analysis is needed, and policy makers should not move forwards on this issue until it is available. For that reason we urge Members of the House of Lords to vote against Lord Bird’s Bill tomorrow.”
A full briefing has been provided setting out our detailed objections, and is available here.