How India’s first rent credit score system can help you build a credit profile

In a recent move, RentenPe has introduced India’s first-ever rent credit score and residence card (R-Card) repository. This initiative aims to bridge a key gap in the financial system by recognising rent payments as a credible indicator of financial reliability, a metric that has been overlooked in traditional credit scoring.

Addressing the credit gap

Many young professionals, especially those new to credit, face challenges in building a robust credit history.

For individuals who have migrated for better opportunities but are yet to engage with formal credit channels like loans or credit cards, creating a CIBIL score becomes difficult.

Renting is often the largest monthly expense for such individuals, but these payments typically don’t impact their credit scores.

RentenPe’s rent credit score changes this by allowing tenants to build their credit profiles based on timely rent payments.

As Sarika Shetty, Co-Founder & CEO of RentenPe, states, “Rent should be acknowledged as a parameter in financial assessments, just like loan EMIs or credit card bills.”

How the rent credit score works

RentenPe’s rent credit score is calculated using an advanced algorithm that factors in the consistency, amount, and history of rent payments.

Tenants can download the RentenPe app, register their rent details, and receive rewards for timely payments.

In cases of financial strain, tenants can also access rent loans.

The Rent Credit Score has these benefits (as stated by Sarika Shetty, Co-Founder & CEO of RentenPe):

Improved credit profile: Rent payments contribute to the tenant’s creditworthiness, potentially making them eligible for pre-approved home loans.

Better rental agreements: Landlords may offer more favourable terms to tenants with a strong rent payment history.

Reward system: RentenPe offers a payment gateway that rewards tenants for on-time payments.

From rent to homeownership

According to Shetty, the ultimate goal of RentenPe is to support tenants in their journey from renting to homeownership.

With a strong rent credit score, tenants may qualify for home loans more easily.

ALSO READ | Should you buy a house or rent for life?

(Edited by : Shoma Bhattacharjee)

First Published: Oct 23, 2024 5:13 PM IST

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