Tens of thousands of Scots in social housing could gain access to cheap credit under a pioneering new scheme.

The Rental Exchange will see regular rent payments accepted as evidence of a good credit history, and could help prevent people on a low income turning to loan sharks or expensive forms of lending such as payday loans.

It could also help give people in privately and socially-rented housing access to fairer terms on major purchases and online credit to pay fuel and other bills.

Three years in the making, the deal was set up by the Big Issue's social investment arm Big Issue Invest, to help address the problems faced by many people on a low income who have no credit history, so cannot get credit. That Catch-22 is made less fair by the fact that regular mortgage payments count towards a traditional credit history, while regular rental payments do not.

However, credit agency Experian has joined with BII to carry out research demonstrating that people who pay their rent regularly are a good credit risk, and persuaded its customers of the concept.

Nearly 600,000 Scots rent from housing associations or local authorities while another 368,000 rent privately.

"If you are in private or social rented housing at the moment, even though most people pay rent in arrears at the end of the month, that payment you make isn't counted anywhere towards a credit rating," said John Montague. "We wanted that to be seen equally with mortgage payments."

Prior to the scheme only 40-45 per cent of social housing tenants were able to be authenticated for online credit, but in areas where it has been trialled, 85 per cent were able to achieve this status, the equivalent level as the general population.

This is important because it opens up cheaper deals which previously were only open, paradoxically, to the better off. Modern services, from insurance quotes on price comparison sites, to cheaper fuel bills for those paying by direct debit or in a paperless way, to interest free credit on white goods and furniture, are often dependent on near-invisible online authentication.

As an example, the Rental Exchange cites the difference between three years interest free credit on an £799 sofa and the £3442 hire purchase cost of a similar item over four years, for someone whose credit history cannot be authenticated.

Mr Montague said there had been some objections to the concept from a minority of tenants. "The only resistance tended to come from an older generation of tenants who find this all a bit Big Brother", he added. "But our message to people is start using the system yourself, rather than letting the system use you."

However the majority of people either welcome the scheme or assumed rent rent payments already counted towards a credit rating, he said. In one English housing association test site, only 21 people out of 18,000 tenants have opted out of the arrangement.

Experian product manager Matt Spowage said his company had been able to bring its knowledge and the ability to change practises, while The Big Issue had been able to persuade housing associations and other landlords to share data they wouldn't previously have done. "Our research showed rental payments could be a reliable determinant of someone's credit risk in the future, but then we had to tell our customers this information could be useful to them and also bring social landlords on board."

The scheme is not about encouraging people on low incomes to take on more debt he added - many already use credit but in very expensive forms. Meanwhile digital financial exclusion is a growing problem. "More and more people are looking to authenticate people online. If you can't be authenticated for a product or service, you will either be refused or the price you are offered will go up."

Jim Mullen, chief executive of the Big Issue UK said the partnership could have a major impact on the budgets of people on a low income. "The Rental Exchange has the greatest potential with respect to positively changing the lives of people across the UK of any initiative in which The Big Issue group is currently involved," he said.