By Sarika Shetty, Co-founder & CEO, RentenPe
India’s digital economy is a marvel of the modern world. In 2025 alone, the Unified Payments Interface (UPI) accounted for a 49% share in the global real-time payment system transaction volume, as per the ‘Growing Retail Digital Payments (The Value of Interoperability) report by the International Monetary Fund (IMF)’. With tens of millions of transactions happening every single hour transforming the way individuals consume, travel, and invest, the scale is unprecedented.
Yet, a peculiar blind spot persists right in the middle of this data-rich landscape. Imagine a young professional in Bengaluru or a gig worker in Mumbai. Every month, their largest and most consistent financial outflow is rent. They pay it diligently, year after year, demonstrating unwavering financial discipline.
This situation highlights a significant inefficiency within the existing lending framework. While the nation advances toward comprehensive financial inclusion, millions of citizens remain classified as ‘credit-invisible’. They lack a formal history of loans or credit cards, meaning their financial identity is virtually non-existent to mainstream lenders. Addressing this gap requires looking beyond conventional parameters and recognising the untapped potential of ordinary financial behaviours.
The Credit Paradox
Historically, traditional scoring algorithms have operated on a somewhat circular premise: to obtain credit, an individual must already possess a credit history. These models evaluate repayment patterns from prior debts to forecast future defaults. Although this method is particularly effective for established borrowers, it inherently excludes individuals who are just entering the workforce, migrating to urban areas, or working in informal sectors.
For families and individuals living on rent, housing expenses represent a significant chunk of their disposable income. When a tenant prioritises their housing obligations above everything else, they are signalling a high degree of financial responsibility. Ignoring this behavioural data means lenders are leaving a vast pool of prime, creditworthy customers on the table simply because of outdated underwriting criteria.
Alternative Data and the DPI Advantage
The conversation around alternative credit scoring has gained immense momentum recently. Empowered by India’s robust Digital Public Infrastructure (DPI) and open banking protocols, the financial industry is slowly pivoting from solely relying on static loan ledgers. The new frontier involves analysing cash flow patterns, utility payments, and digital footprints. Within this alternative data spectrum, verified rental history emerges as arguably the strongest and most predictive signal.
It is not merely about noting a transaction, it is about mapping a behavioural trajectory. Converting rental behaviour into a dedicated risk signal often termed a “rental trade line” captures nuanced metrics that traditional scores miss. Lenders can evaluate on-time payment consistency, the duration of uninterrupted payment streaks, and income-to-rent ratios.
Impact on the Broader Ecosystem
Integrating rental payments into the mainstream credit evaluation process goes beyond merely enhancing existing algorithms. For consumers, this change facilitates quicker credit building.
For the lending ecosystem, the advantages are equally compelling. Financial institutions constantly battle ‘Type II errors’—the inadvertent rejection of capable, low-risk borrowers due to insufficient data.
By incorporating rental insights, banks and NBFCs can confidently extend starter mortgages, flexible personal loans, and credit-builder products to previously underserved demographics. Real-time, verified cash flow behaviour anchors the underwriting process, actively mitigating risk.
Further, this shift aligns perfectly with changing consumer preferences. Millennials and Gen Z are driving the urban rental boom, favouring mobility and co-living spaces over immediate homeownership. As organisational housing platforms scale across the country, tenant data aggregation becomes far more streamlined. Over time, organised data can pave the way for highly innovative financial products.
Transforming rental payments into an engine for alternative credit requires a synchronised industry effort. It needs support from regulators to make data reporting consistent, ensure identity protection for consumers, and readiness from credit bureaus to change their scoring methods. The technology to capture and verify these payments securely already exists.
The future of lending will not be determined solely by past borrowing but rather by individuals’ ability to consistently manage their everyday financial responsibilities. Acknowledging rent as a valid financial credential represents a crucial step towards democratising access to capital. By offering credit where it is genuinely warranted, the financial sector can facilitate unprecedented growth and establish a more inclusive and resilient economic foundation for the coming decade.