Should Rent Be Counted as Credit History Towards Mortgage Eligibility in Nigeria?
Summary
Regular, on‑time rent payments represent substantial recurring financial commitments by tenants, yet are often overlooked when assessing creditworthiness for mortgages.
The UK has introduced mechanisms (e.g., Rental Exchange, CreditLadder, CreditLadder‑TransUnion partnership) to include rent payments in credit reference agency (CRA) data. Evidence suggests many renters see improved credit scores and better access to credit.
Including rent in credit histories (with proper safeguards) can help address credit invisibility, improve financial inclusion, reduce default risk (by better understanding payment behaviour), and lower barriers to mortgage access.
However, risks include data verification/accuracy, potential for negative marks from rent arrears, resistance from landlords, landlord/tenant privacy concerns, and complexity of integrating rent data into existing credit risk models.
Policy and regulatory frameworks are needed to standardize reporting, protect consumers, ensure fairness, and incentivize landlord participation.
| Problem | Impact on Borrower / Lender |
|---|---|
| Credit Invisibility | Many people (especially younger, lower-income, or informal sector) have little or no formal credit history. Without credit cards or loan products, even though they reliably pay rent, they cannot demonstrate creditworthiness. |
| Affordability / Access to Mortgages | Mortgage lenders often require proof of financial reliability. Rent is a major monthly commitment; recognizing good rent payment history could reduce perceived risk and increase eligibility for mortgages, or improve interest terms. |
| Risk Assessment | For lenders, more data points (i.e., regular payments made on time) reduce information asymmetry, improve predictions of default risk, and enable better pricing of risk. |
| Social and Economic Inclusion | Helps persons in informal employment, young professionals, and people who cannot or do not use credit cards/loans, to build credit reputations. |
Case Study: United Kingdom
How the UK Has Implemented Rent Reporting
Rental Exchange: A programme managed by Experian in partnership with social landlords, letting agents, private landlords, and rent payment platforms to allow tenants’ regular rent payments to be reported to the credit reference agencies. This is often opt‑in.
CreditLadder: A private service that tracks rent payments (via Open Banking) and reports them to TransUnion and other CRAs. Tenants register and link their bank account and tenancy details so rent payments can be verified and added to their credit report.
Outcomes & Benefits in the UK
Experian has reported that over 1.2 million tenants’ rent payments are now being recognised via Rental Exchange, social housing providers, etc.
As many as ~80% of tenants in some reports see an improvement in their credit score due to the inclusion of rent payments.
Credit scores improved sufficiently for these renters to get better terms on loans/mortgages, or access credit they previously were excluded from. While detailed statistics are mixed/limited in the public domain, anecdotal and sectoral data indicate measurable improvements.
Data quality improved: landlords / letting agents and social housing providers have been gradually enrolling and cooperating; Open Banking/verification via bank statements or payment systems reduces fraud risk.
Existing Challenges in the UK
Not all landlords or letting agents are participants; many renters must opt in or use third‑party services. Rent payments made before enrolment generally don’t count.
Reporting is positive only if payments are timely, but negative events (late rent, arrears) may also be reported, which could harm credit. Questions of fairness: e.g., rent arrears due to temporary income shocks, etc.
Not all credit scoring/mortgage lenders treat rent payment history equally; in some cases, even if rent shows up in CRA, it carries less weight than mortgage/loan payment history.
Data accuracy, verification, and identity/tenancy fraud pose risks. Privacy and data protection regulations must be adhered to.
| Enabler / Condition | Why It Matters | UK Status | Considerations for Other Countries (e.g., Nigeria) |
|---|---|---|---|
| Reliable Payment & Banking Infrastructure | Successful rent reporting requires consistent and verifiable bank or payment records for rent, ensuring all transactions are digitally trackable, ideally through bank transfers or payment applications. | The UK benefits from nearly universal bank account access, a mature Open Banking framework, and advanced digital payment systems, enabling most landlords and agents to utilize modern rental management platforms. | In many developing markets, a significant proportion of rent is paid in cash, often without formal receipts, and many landlords operate informally or are unregistered. This environment requires significant effort, including the expansion of digital payment infrastructure and specific incentives, to improve documentation and banking penetration. |
| Credit Reference Agencies & Regulatory Framework | Credit Reference Agencies (CRAs) must be equipped to accept and seamlessly integrate rental data, supported by robust regulatory oversight that ensures fairness and strong data protection. Lenders must then be mandated to trust and utilize this data in their underwriting processes. | The market is underpinned by established regulatory bodies, including the Financial Conduct Authority (FCA), strong data protection laws, and key Credit Reference Agencies (CRAs) like Experian, Equifax, and TransUnion that facilitate responsible data sharing. | Other countries often contend with less mature CRAs where existing records may be incomplete, posing a major hurdle to reliable rent reporting. Regulation around data privacy and consumer protection is often weaker or underdeveloped, indicating a critical need to strengthen the legal frameworks for credit reporting. |
| Landlord / Tenant Institutional Participation | Widespread adoption hinges on both landlords and letting agents agreeing to report the data, with the provision of user-friendly reporting services; concurrently, high-impact campaigns are required to ensure robust tenant awareness. | Participation is rising, driven by a growing number of letting agents, social landlords, and private landlords. Private sector services, such as CreditLadder, are actively driving adoption and awareness campaigns. | Many landlords are individuals who lack both the incentive and the capacity to report, may distrust the reporting process, or find the administrative burden too costly. Motivating participation requires a combination of incentives, such as tax breaks, official recognition, and comprehensive platform support, alongside campaigns to raise awareness among tenants. |
| Mortgage Lenders’ Acceptance / Underwriting Practices | For rent history to have tangible value, lenders must actively accept and integrate it into their eligibility, risk scoring, and underwriting models. Without this utility, the inclusion of rental data has little practical effect. | UK mortgage lenders are increasingly accepting a positive rental payment history as supportive evidence, often integrating it into affordability assessments, which can directly improve mortgage eligibility. However, the exact impact on lending decisions can vary. | In many contexts, lenders operate with rigid eligibility criteria, focusing heavily on formal income and established credit history, making them reluctant to adjust existing risk models. Encouraging the practical use of rent history requires policy and regulatory “nudges” to motivate lenders to incorporate this valuable data into their affordability and risk assessments. |
| Consumer Protection, Fairness, Privacy | The system must incorporate strong guardrails to avoid the misuse of negative rental information and mitigate bias against individuals in informal rental arrangements or those with fluctuating incomes, while rigorously safeguarding all data privacy. | Strong data protection laws and clear regulatory oversight ensure tenants maintain control via opt-in services, with defined clarity on reporting positive rental payments and, in some cases, access to free reporting tiers. | In countries with weaker legal institutions, there is a heightened risk of data misuse, including landlord retaliation or false claims, necessitating stronger privacy protections and robust legal guardrails. Special provisions are often needed to prevent the system from unfairly penalizing temporary fluctuations in payment (e.g., due to unexpected income loss), ensuring the system remains equitable. |
Recommendation: Implementation Design Principles
If Nigeria were to adopt rent counting as part of mortgage eligibility/credit history, the following design principles and policy steps are recommended:
Pilot & Phased Rollout
Start with pilot programmes in urban areas where digital payments and banking penetration are higher.
Use social housing, large landlords, or developer projects to test models.
Standardised Reporting Platforms / Intermediaries
Establish trusted platforms (public or private) to collect, verify, and report rent payment data to CRAs. Use secure digital methods (bank transfers, mobile money, etc.).
Partner with established fintechs to reduce friction.
Regulatory & Legal Framework
Enact or update laws to regulate credit reporting, data privacy, and consumer protection.
Define obligations and rights: what must be reported, what can be disputed, and how negative rent history is handled.
Incentives for Landlords / Agents
Tax incentives, regulatory recognition, or subsidy support for participating landlords.
Simplify participation (tools, apps) so that reporting is not burdensome.
Awareness & Education
Educate tenants about benefits, rights, and how to enroll.
Ensure lenders understand how to treat rent data in underwriting.
Fair Treatment of Negative Events
Ensure that occasional arrears or extenuating circumstances do not unduly penalize borrowers; allow for dispute, appeal mechanisms.
Consider thresholds for adverse reporting (e.g., only when arrears exceed a certain period or amount).
Integration into Mortgage Underwriting
Lenders should clearly define how rent history will be factored in (e.g., as part of a debt-to-income assessment, affordability checks, or credit score evaluation).
Consider allowing a strong rent history to substitute for a weak formal credit history, especially for individuals new to formal finance.
Implications: For Mortgage Eligibility
Broader Inclusion: Renters who consistently make on-time payments can demonstrate financial discipline, potentially making them eligible for mortgages sooner than before.
Better Lending Terms: With a strengthened credit profile built on a positive rent history, borrowers may gain access to lower interest rates or reduced down payment requirements.
Reduced Risk for Lenders: The availability of this extra data point significantly reduces default risk for lenders and improves their ability to forecast overall loan performance.
Potential for Innovation: Creating a positive rent history foundation enables the development of new financial products, such as rent-to-own schemes, micro-mortgages, and flexible credit solutions.
Conclusion
Counting rent as credit history toward mortgage eligibility is a promising mechanism to increase financial inclusion, reduce barriers to home-ownership, and make credit risk assessment more equitable. The UK’s experience shows that with the right infrastructure (CRAs, rent reporting platforms, landlord participation, regulatory oversight), it can be implemented successfully, with renters reaping real benefits.
For other countries, especially those with high informal sector participation and where many tenants do not have strong formal credit histories, this can be part of a broader set of reforms (e.g., improving payment infrastructure, building CRAs, improving property and lending regulations).
