This is an issue that is more commonplace than many will realise. Renting a property is not simply a case of finding a place and then agreeing to hand over money every month. We look at a common question: can I rent with bad credit?
Like taking out a loan, renting involves an element of trust. The landlord takes the role of a lender. They need assurances that you are trustworthy, and that you will pay rent on time, on the agreed date. They cannot be sure of this, so they need some indication of what makes someone trustworthy, and a good credit score is what they use to judge someone. This makes sense, as it shows that in the past the tenant has been good with money and making payments.
The outcome of the credit checks carried out by landlords or letting agents is key to them accepting you for a property, but the checks are not as all-encompassing as you may have feared. They are not delving into your detailed financial affairs, so you can relax on that front. More importantly, identity verification and court information are the two most important things on your Credit Report as far as landlords are concerned. A bigger problem is that many estate agents now add a significant extra charge just for the check itself. The charge is nothing short of a con, when you could easily supply it yourself for free. It is worrying as it simply adds to the costs of moving house, with no discernible gain for you.
Landlords use public versions of credit reports, so the likes of missed payments and defaults will not be visible on such reports. They only appear on your full credit report, so affects your ability to get financial products, as lenders would use full reports to make decisions. The exception is if you have been marked as being unreliable in making rent payments in the past, and thus on a list that would mean landlords wising to do a fuller credit search.
Nevertheless, you are not guaranteed to pass a soft credit check, and should not assume so. Other factors are also involved, such as character references. Supply full information tough, and you should have little to worry about. What’s more, you can increase your chances of success by ensuring your details are correct on your credit report. Up to date details, and make sure you are listed on the electoral roll. A full address history is beneficial too.
If you have an active CCJ, this may be one of the few instances where a history of bad credit can hinder your application. This is because it will appear on a public record. The landlord would see it. After 6 years, it will disappear, so it depends on how recent it occurred. Insolvencies like bankruptcies and IVAs work in a similar manner. Just because a landlord sees such records, does not mean they will decline you – it is their call.
If for whatever reason you do not pass the credit check, you may be given the option to use a guarantor to vouch for you instead. They may even have to make repayments on your behalf. It is an option for those with no other choices, but puts a lot of pressure on the guarantor, and depends on absolute trust. Alternatively, you can win over a landlord by paying upfront, or offering a bigger deposit. This takes risk away form them, but of course is dependent on you having greater funds to hand.
References often form a standard part of the application process, but a glowing written endorsement from your current or previous landlord should act as good proof that you can be trusted to pay rent on time, and what you’re like as a tenant.