"Genius" Creditworthiness Assessment Bill given cross-party backing

Lord John Bird’s proposed Creditworthiness Assessment Bill – the plan to make rental payments a compulsory part of a good credit score – has received ringing cross-party endorsement during a key parliamentary debate.

The bill was hailed as ‘genius’ during a House of Commons petitions committee debate on October 23. The debate, on taking into account rental data during mortgage applications, was triggered by Plymouth dad Jamie Pogson’s 147,307 signature-strong petition on the subject.

During the debate, Jonathan Reynolds MP, Labour’s Shadow Economic Secretary to the Treasury, pledged that the opposition front bench was fully behind Lord Bird’s bill while his opposite number Stephen Barclay MP insisted that current regulations did not stop lenders from taking rental payments into account.

The rental exchange scheme by The Big Issue and Lord Bird I think is hugely positive. In fact, I think that it is a genius idea and I can’t believe that people haven’t thought of it sooner

The Big Issue’s rental exchange scheme, run in collaboration with credit reference agency Experian, helps to build up a positive credit file for tenants based on this idea – and has already seen more than one million social housing tenants sign up to the initiative.

This will mean fairer access to more affordable credit, for things as simple as white goods, so borrowers won’t be forced towards rapacious lenders.

The scheme has led to a move to help many more renters, not just those in social housing. Big Issue founder and cross-bench peer Lord Bird has been actively pushing for his Creditworthiness Assessment Bill which is making its way through the Lords. It aims to make it compulsory for lenders to take rental payment and council tax payment into account when assessing potential borrowers. At present this is not mandatory.

Stalybridge and Hyde MP Reynolds said: “As has been said, up to 80 per cent of renters have seen their credit rating rise when they have been able to include their rental payments in their credit score. Crucially, it has added a digital footprint, which is so important these days, for many people who simply did not have one before.

“I was able to meet with Lord Bird quite recently and have a chat about the principles behind his bill and I think that, if you can excuse the pun, it is to his credit that he has put this bill forward. I think that what a lot of us would like to see is a considered attempt to tackle some of the root causes of poverty in this country.

Labour's Shadow Economic Secretary to the Treasury Jonathan Reynolds was among those who backed the bill

“In response to this e-petition, I am happy to pledge in principle the support of the opposition front bench for the kind of initiative that this e-petition talks about and for Lord Bird’s bill which seeks to put it into legislation. It seems like a sensible way forward that hopefully we can all agree upon.”

Mr Barclay, Conservative MP for North East Cambridgeshire, added: “The government agrees that a history of paying rent on time is a factor that lenders can consider when assessing creditworthiness but it is a factor alongside other factors that they should take on board.

“Credit reference agencies being able to access data relating to histories of tenants paying rent will benefit both the buyer and the lender.”

The initiative was also hailed by the SNP economic lead Kirsty Blackman, who represents Aberdeen North. She said: “The rental exchange scheme by The Big Issue and Lord Bird I think is hugely positive. In fact, I think that it is a genius idea and I can’t believe that people haven’t thought of it sooner because it is just a great way in order to ensure that, for social rent in particular, rental payments are evidence of creditworthiness. And that evidence is an important issue.”

It’s brilliant to see such strong, cross-party support in the Commons for The Big Issue ‘Rental Exchange’ initiative, the inspiration behind my Bill.

However, David Jones, Conservative MP for Clwyd West, pointed out a potential “artificial layer of bureaucracy” between landlord and tenant through the use of payment platform CreditLadder to transfer rent fees.

John Bird, founder of The Big Issue

He also cited CreditLadder’s lack of backing by the Financial Services Compensation Scheme as a concern.

Big Issue founder Lord Bird said: “It’s brilliant to see such strong, cross-party support in the Commons for The Big Issue ‘Rental Exchange’ initiative, the inspiration behind my Bill.

“Jamie’s debate marks the start, and not the end, of the campaign to make rent count. There’s still a way to go, but we’re on track to help millions of renters in Britain get fairer access to more affordable credit; a long-overdue hand-up for Generation Rent.”