Credit checks for renting

Renting a house or flat can be a difficult process. Even if you find the place you want and have enough cash for a deposit, you still need approval from the landlord. They’ll want to be sure that their tenant is responsible and able to afford to pay the rent that’s been agreed on. As such, they are likely to ask for proof of character and income in the form of references and documents. They might also decide to get information from a third party, for example, by running a credit check with a credit reference agency.

Why do landlords run credit checks for tenants?

Landlords want to ensure that they will be paid the rent they are owed when they let out a property. A credit check can help give them information about the tenant’s previous history when it comes to paying back debts. If there are County Court Judgements (CCJs) or insolvency solutions on a tenant’s credit report, a landlord might decide that this indicates that the potential tenant will have trouble paying them in the future.

Once a tenant is living in a property, it can take time to get them out if they stop paying their rent. A landlord will have to give the tenant written notice of eviction and then possibly get a court order called a ‘possession order’. Therefore, landlords will want to be as sure as possible that eviction can be avoided and that tenants will not end up in arrears.

What information does a landlord credit check reveal?

Before a landlord can run a credit check they must get permission, usually in writing, from the prospective tenant. The information they will receive will not be as comprehensive as the information available to lenders, credit reference agencies and the tenants themselves. It will only include information held on public registers, such as the electoral roll, the Individual Insolvency Register and The Register of Judgments, Orders and Fines.

Essentially a landlord will be able to confirm a tenant’s name and address, as well as any history of insolvency or CCJs. They can’t access information on credit agreements, credit limits or repayments. Tenants are not legally required to agree to a credit check, but without one a landlord may not feel confident renting to that individual.

What other information might a landlord ask for?

As well as a credit check, a landlord may also ask for references from previous landlords or from employers. They are also legally obliged to make sure that a tenant is allowed to live in the UK, so will ask for some form of identification to confirm this.

They might also require proof of employment, such as payslips or a P60, in addition to the first month’s rent in advance. In some cases, it might be necessary for a tenant to use a guarantor. This is someone who agrees to pay the rent in the event that the tenant cannot. This will often be a parent or relative who has a better credit history or proof of a steady income.

What can you do if a landlord rejects your application?

If you’re rejected by a landlord because of your credit history, you should try and find out exactly what led to this decision. You might be able to get feedback from them, and whether you do or not, you can still check your credit report to get a full picture.

If you know that you have a poor credit history, it’s a good idea to be honest up front. This can save time and even help you avoid wasting money, for example, if you’re rejected after paying non-refundable agency fees. It might be the case that you can still rent the property by paying a larger deposit or using a guarantor.

If you think your credit history is preventing you from being able to rent, you can look at factors that might be affecting it. Addressing these issues can help improve your creditworthiness and give a positive indication to lenders or service providers.

If you’re interested in checking the details of your credit history, you can get online access to your credit report with the Equifax Credit Report & Score, which is free for 30 days and £14.95 monthly thereafter.