Recently TPN and Experian announced that they had signed an exclusive partnership. This means that for the first time in South Africa, people who live in rented accommodation and pay their monthly rent on time, will see their positive payment behaviour being made accessible to participating credit providers, helping to open up access to more affordable credit.
Information about mortgages
payments, in South Africa, has always been recorded on credit reports, enabling
mortgage holders to build a positive credit history and gain access to more
finance deals. Until now, people living in privately-rented properties
who meet their rent payments on time have never seen this positive information
included on their credit reports.
The partnership will
provide Experian South Africa with access to a comprehensive rental payment
database. Including rental history in credit files will enable greater
financial inclusion, especially those among South Africa’s under-banked
population. The move will allow consumers to build or rebuild good credit
profiles by paying rent on time to enable them to qualify for appropriate new
leases or other financial products.
Most Importantly - The partnership’s benefits include:
- Access to more affordable credit. The inclusion of rental-payment data will help strengthen an individual’s credit history.
- A boost for first-time buyers to provide a welcome boost to the credit histories of people looking to get onto the property ladder for the first time, as lenders will be able to more easily verify their full borrowing history.
- Easier identity verification. Many financial organisations rely on electronic identity checks based on credit reports. Stronger credit reports will help more people successfully satisfy these checks, avoiding the need to resort to slower, paper-based methods.
This unique partnership
offers a secure and compliant way to include a tenant’s payment history in
their respective reports, strengthening their credit history and helping them
qualify for more and lower-cost credit deals. This enhanced view of an
individual’s repayment history will also improve the ability of lenders to
treat customers fairly with more accurate lending decisions based on a deeper
understanding of their customers.
“This exclusive partnership
will not only support our ongoing efforts to capture the total picture of a consumer’s
payment record and give lenders in South Africa a better view of what a person
can reasonably afford, but it will also play a valuable role in helping to
tackle financial exclusion in this country,” said Michelle Beetar, Managing
Director Experian South Africa. “There are millions of people who struggle to
access affordable credit because they are non-credit-active, cash-based
consumers and, therefore, have a poor credit rating.”
“The partnership between
TPN and Experian South Africa to bring credit and rental data together is
a ground-breaking win for people who rent and gives participating credit
providers a more comprehensive view of their applicants so that they can make
more responsible lending decisions. Consumers and lenders in the UK and
the US have already seen huge benefits thanks to similar partnerships Experian
has undertaken there.”
The proposed affordability
guidelines mean that credit providers will be required to conduct a thorough
assessment of a consumer’s affordability to determine their disposable income -
after servicing the necessary and statutory expenses, as well as their current
credit agreements. Rental data will enhance the credit provider’s ability
to determine the expenses in the affordability assessment, thus providing a
clearer indication of the discretionary income.
The information will be
shared based on a reciprocal relationship agreed between the participating
credit provider, Experian and TPN, which means that TPN’s clients, the property
managers, landlords and rental agencies will also gain a more accurate and
complete picture of renters.
“TPN focuses on the
collection of rental payment behaviour, this partnership with Experian allows
both credit providers and landlords see a more complete picture of the
consumer,” said Michelle Dickens, Managing Director TPN credit bureau.
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