Credit Reports: What Are They and Why Tenants Need to Know About Them

While many people believe that renting is easy in comparison to buying a property, you might be surprised to hear that getting accepted for a rental is actually a very difficult process. For one, you actually have to find a property that suits your needs and location. Then, when you find that dream home, you have the agonising wait while the landlord decides on which applicant to choose.

Here your landlord will look at a number of factors while deciding if you’re suitable for their property. This can include character references, proof of income and may involve a credit check to ensure you are likely to pay your rent.

Why Do Landlords Run Credit Checks?

When a landlord rents a property, they are putting trust in that person to both pay their rent on time and look after that property. By running a credit check, your landlord will be able to confirm that you are who you say you are, which makes you more trustworthy to pay your rent. As, if the tenant you choose is late with payments or doesn’t pay rent at all, it can be hard to get that person out the home, which loses money and causes stress for that landlord.

What Information Will Your Credit Report Show?

Your landlord will seek permission before running a credit check on you, however, if you want a property you may need to agree to this check. However, this credit report will not give your potential landlord as much information as it would to a company providing a loan.

The credit search performed by a landlord is a ‘soft search’, this means that they will only see information that is available publicly. This means that they can confirm your name and address as well as if you have a history of insolvencies.

More recently, new measures have been taken to allow some renters to show that they’ve paid rent on time in the past on their credit report. This will show potential employers that you are a good choice for a tenant.

Will Your Landlord Ask for Other Information?

As well as a credit check, you landlord will likely ask for you to provide references for a character check. These references will usually be provided from a previous landlord or from your employer, and will help show you as an attractive tenant for this new property. You’ll also need to show proof of employment, usually through a P60 or payslip, as your landlord needs to know you have an income to pay your rent.

Your landlord may wish you to provide some as a guarantee for your rent, which means if you cannot pay your rent, that guarantor (likely a parent) would step in. There is also a legal obligation for UK landlords to ensure that a tenant is legally living in the country. This means you’ll need to provide a formal piece of identification.

If you do have a bad credit score, it can help to be upfront with your potential landlord and explain your situation. By offering a higher deposit or providing a guarantor, they may still consider you for the property.