Yorkshire Water has announced it’s started sharing its customers’ payment data with credit reference agency Experian. Could this spell good or bad news for your credit rating?
Ultimately, this move from Yorkshire Water means that its customers’ credit records will now show whether they’re up to date with their water bills, or whether they’ve fallen into arrears.
Lenders use your credit record when deciding how much money they’re prepared to lend to you, and at what interest rate. Traditionally, it focused on how much money you owe to banks and other lenders, and how good you are at repaying it.
But increasingly, credit rating agencies are looking at other aspects of financial management too. Yorkshire water isn’t the first utility company to share data with Experian, and within the next few months, Experian will start collecting details of your rental payments. So, if your landlord signs up to the service – your rent payment history could also form part of your credit rating.
Is there such a thing as over-sharing?
There are potential benefits to an increase in data-sharing. After all, if you’re meeting all your financial obligations, it could result in a better credit rating for you.
And for those who have yet to establish a credit history, it could be helpful for payments like rent and utility bills to be taken into account. After all, young people or those who haven’t borrowed money before can find themselves in a bit of a catch-22 situation – a lender won’t lend to them until they can prove how reliable they are at repaying credit.
But equally, if you were to miss some water payments or a gas bill, you could find your rating suffers. This could make it more difficult and expensive to get credit.
Arguably, companies lending you large sums of money are entitled to know how likely you are to pay it back. But how do you feel about credit reference agencies having access to extra financial information about you? Do you welcome it as an opportunity to demonstrate your credit-worthiness? Or do you think lenders have access to enough information already?